Joe Biden was warned by the Treasury Secretary and his wife not to write off student debt, but continued despite Kamala Harris‘s insistence, it has been claimed.
Treasury Secretary Janet Yellen argued that with inflation around a 40-year high, canceling student loans could free up consumer spending and drive up inflation, the New York Times reported.
Jill Biden, who works part-time as a college lecturer, also urged her husband to reconsider. She campaigned for free community college, but did not push for debt cancellation.
The president ultimately chose to ignore their advice – after being coaxed into the matter by Vice President Kamala Harris, who was in favor of loan cancellations.
Mike Donilon, one of Biden’s closest political advisers, told him polls showed Americans were divided on the issue.
Still, Ron Klain, his chief of staff, said it could be a popular move with young voters, as the midterm elections approach.
One of the most “persistent” supporters of debt relief was Vice President Kamala Harris.
In February, she tasked her team with creating a memo detailing Biden’s debt relief concerns and addressing them one by one, The New York Times reported.
Joe Biden is seen announcing student loan cancellation on Wednesday – against the advice of Jill Biden and Janet Yellen
He was eventually persuaded to do so by his Vice President Kamala Harris, as well as New York State Senator Chuck Schumer, who has been pestering Biden about it since shortly after his inauguration last year.
The president announced Wednesday that anyone earning less than $125,000 would have $10,000 wiped from their student loans.
On Friday, The New York Times reported that many in the White House had significant doubts about the wisdom of the plan – and that, despite months of lobbying from both sides, the rollout had been so rushed that loan companies were uninformed and that White House economists had no idea of the cost of the program.
An estimate by the Wharton School of Business puts the cost at $1 trillion.
They estimate it will cost between $300 billion and $980 billion over the 10-year budget window and concluded that around 70% of debt relief goes to borrowers in the top 60% of the income distribution – which , according to supporters of the policy, was not the case.
Jill Biden, seen with her husband on August 8, warned him against canceling student debt, the New York Times says.
Janet Yellen, the Treasury Secretary, would also not have been convinced of the wisdom of the plan
Kamala Harris strongly supported the plan, The New York Times reported.
One concern was that debt cancellation would benefit “elite private schools,” but Harris’ team said “only 0.3% of federal borrowers attend Ivy League schools.” .
To counter his concern that the loans would be canceled by an act of Congress, Harris’s team reminded him that similar executive authority was already used to enact the suspension of loan payments.
Other strong supporters of debt relief included Chuck Schumer, the Senate Majority Leader.
Schumer took a May 17 flight on Air Force One to lobby Biden on the issue, according to the newspaper.
He reminded Biden that canceling student debt was a campaign promise and told him it would help lower-income sections of society.
In May, Senators Elizabeth Warren of Massachusetts and Raphael Warnock of Georgia met with Biden and Schumer at the White House and insisted it would help borrowers who did not graduate.
Jill Biden, who still works as a teacher, backed free community college but not debt cancellation
Yet despite Biden’s months of agony, the decision when it came was rushed.
The Department of Education hadn’t fully figured out how the program would work, and student loan companies didn’t know what to say to the masses who called them after the announcement.
Moreover, the announcement was made before White House economists could estimate its full cost.
Biden insisted on Wednesday that it was the right thing to do.
“Some think it’s too little. But I believe my plan is responsible and fair,” he said.
“It focuses benefits on the middle class and working families, it helps current and future borrowers, and it will fix a badly damaged system.”