Americans don’t believe Biden will cancel student debt

Trying not to work two jobs.
Trying not to work two jobs.
Image: Reuters/Evelyn Hockstein
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More Americans are losing hope Joe Biden will cancel student debt, according to a new survey from the Federal Reserve Bank in New York.

Donald Trump’s administration paused loan repayments early on in the pandemic, and Biden made student debt forgiveness a top campaign promise. Since then, the president has said he will decide whether or not to cancel a portion of student debt before payments are due again, in August.

Part of the reason why borrowers are less confident that will happen is an overall decline in Americans’ beliefs that welfare of any kind is going to increase in the future. Expectations for unemployment benefits, subsidized preschool education, affordable housing, and federal student aid all fell, according to the NY Fed survey.

To be clear, optimism that the federal government will expand debt forgiveness in the next year is still higher than pre-pandemic levels. In December 2019, only 18% of Americans foresaw student debt forgiveness expanding whereas 32% see it increasing now.

The current number is down from a peak of 43% in April 2021, however.

Student loan repayments would hit budgets

Prior to the pandemic, student loan payments were weighing down borrowers’ budgets by $393 a month on average. There are surveys that suggest these borrowers will resort to picking up a side gig if payments resume.

Unlike most other welfare programs, however, the president likely doesn’t need Congressional approval to cancel the $1.6 trillion in federal student debt. In fact, doing so would likely serve as recession insurance while not stoking prices too much.