Fact-checking 6 Criticisms of Biden's Student Loan Forgiveness Plan

When President Joe Biden announced his plan on Wednesday to forgive a portion of the federal student loan debt held by millions of Americans, he set off a fiery national argument from just about every corner of the ideological spectrum.

“An entire generation is now saddled with unsustainable debt,” Biden said at the White House. More than 44 million Americans carry more than $1.7 trillion in student loan debt—a situation that economists and higher education experts cite as a pressing obstacle to upward mobility for many of them.

The Biden plan cancels $10,000 of education debt for individual borrowers making less than $125,000 a year, couples making less than $250,000, and $20,000 for Pell Grant recipients at the same income threshold. The president also extended the pause on loan repayment until the end of the year, and instituted new rules to try to ease the burden on debt holders going forward. Notably, he launched an income-based repayment plan that caps borrowers’ monthly payments at five percent of their salary.

But just as the policy decision brought joy and relief to millions of people who had a weight taken off their shoulders, Republicans cast the decision as an executive overreach that was both morally unfair and economically catastrophic. It wasn’t necessarily a slam dunk with every Democrat, either. A number of frontline Democratic candidates distanced themselves from the proposal, and some prominent progressive activists criticized it for not going far enough.

But the lion’s share of the attacks on the president’s plan have come from the right. Below is a fact check of the most prominent criticisms against the plan.

1. It’s a bailout for the rich

The argument: Shortly after the White House unveiled its decision, Republican leaders denounced it as a gift to the wealthy. “The median American with student loans has a significantly higher income than the median American overall,” Senate Minority Leader Mitch McConnell said in a statement. “Experts who studied past proposals found that the overwhelming benefit of student loan socialism flows to higher-earning Americans. Democrats specifically wrote this policy to make sure that people earning six figures would benefit.”

What we know: While the median income of student borrowers does exceed that of non-borrowers, it’s not the full story. It stands to reason that people who took out loans to earn a degree would make more money than those who never earned a degree at all. And the Americans who hold the largest amounts of debt tend to have accrued it from graduate professional programs, like medical and law schools, that lead to high-paying jobs.

The average amount of undergraduate debt, however, is a little less than $30,000, and a drop in the balance by $10,000 or $20,000 could be transformative for the middle class. Research shows that student loan debt is one of the biggest barriers to getting married and owning a home.

When asked by TIME to clarify the studies backing up McConnell’s claim that the highest earners would gain the most from student loan forgiveness, a spokesperson cited a University of Chicago study, saying it “found that if the federal government forgave $50,000 per borrower, the bottom 20% of earners would get 8.5% of the benefit. The top 20% of earners would get 22% of total debt wiped out.”

But that part of the analysis was evaluating a proposal from the likes of Sens. Bernie Sanders and Elizabeth Warren to forgive $50,000 of student debt from each borrower—a different plan than Biden’s. The GOP Senate aide also cited a 2019 report from the Brookings Institution focused on Warren’s specific proposal.

In fact, the White House plan has guardrails in place to prevent the richest Americans from taking advantage of the program. Only individuals making less than $125,000 a year and couples making less than $250,000 a year are eligible for the $10,000 forgiveness. (The same goes for the $20,000 for Pell Grant recipients.)

2. It will make inflation worse and lead colleges to hike tuition

The argument: One of the most prominent Republican broadsides has been that Biden’s plan will have an inflationary effect. “Biden’s debt transfer scam will make inflation even worse and does nothing to stop the runaway cost of college for most families,” tweeted House Minority Leader Kevin McCarthy.

The argument is that the move will increase the deficit and will lead borrowers who have had their loans forgiven to spend more, thereby heating up the economy. Some critics also suspect that forgiving these loans may incentivize colleges and universities to raise their prices.

What we know: Whether Biden’s plan will aggravate inflation is unclear. It will result in no federal outlays. Rather, the government has essentially agreed to no longer be reimbursed for loans it already disbursed, along with interest. Higher education experts have noted that many of these loans were never going to be fully paid back anyway because they were set to be forgiven after 20 years. (Biden’s plan made it so that loans can be forgiven for each borrower after 10 years of repayment going forward.)

Whether the move will lead to higher college tuition, or at least encourage them to not lower tuition, is hard to say. It’s conjecture, after all, and expert opinion is mixed. “It might actually be doing damage to what I think is the biggest problem in this country, which is the cost of college,” says Martin Van Der Werf, the director of editorial and education policy at Georgetown University’s Center for Education and the Workforce. “Colleges might look at this and might use it as an excuse to maintain their high prices.”

But Julie Peller, executive director of the bipartisan advocacy group Higher Learning Advocates, says there’s reason to suspect it won’t. The argument, she says, is the latest iteration of what’s known as the Bennett Hypothesis, the theory that colleges raise tuition whenever financial aid is increased. (It comes from Ronald Reagan’s education secretary, William Bennett.) “The data has shown it doesn’t really pan out,” Peller says, citing research that has shown a lack of empirical support for increased financial aid causing an increase in tuition prices.

3. It’s not fair

The argument: Many Republicans have critiqued the plan on ethical grounds, saying it excludes people who already worked to pay off their loans, military veterans who served to avoid going into debt, and those who opted out of college. “It’s completely unfair,” said Rep. Marjorie Taylor Greene, Republican of Georgia, on Newsmax. (The White House fired back that her business had more than $183,000 in loans received under the Payment Protection Program forgiven.)

What we know: This is perhaps an inevitable attack line from critics of the plan. It’s one of the reasons even some Democrats have pushed back on it. This will likely become a prominent battle line in the upcoming midterms.

Democrats supporting the plan say it will bring huge relief to millions of low- and middle-income Americans. They are also likely to point out other inequities that tick off voters, as Biden did when asked about this on Wednesday. “Is it fair to people who, in fact, do not own multi-billion-dollar businesses if they see one of these guys getting all the tax breaks?” the president told reporters. “Is that fair? What do you think?”

Republicans counter that what Democrats really care about is energizing young voters, who overwhelmingly lean Democratic.

4. It doesn’t address the root cause of the problem

The argument: This isn’t just a Republican charge; many progressives and thought leaders in the higher education space have leveled the same critique. While the plan may bring some much-needed relief to more than 20 million borrowers, it doesn’t do enough to address the exorbitant costs of higher education. Over the past two decades, the cost of college has risen more than any other good or service except hospital care.

What we know: While Biden’s plan is a narrow solution to a huge, complicated problem, there’s not much that he could have done to lower college costs with the stroke of a pen. The leading proposals to reduce the price of college are pretty limited.

Most conservatives have insisted the only solution would be consumer-based, in which students stop enrolling in colleges because the price is too high, leaving colleges to embrace the most sensible response to increase enrollment: lower the price. Others have pushed for the federal government to institute price controls on college tuition, a controversial policy that would need to pass out of Congress—an impossibility in the current climate.

Instead, the administration instituted an income-based repayment plan that allows undergraduate borrowers to pay only five percent of their monthly income each month. That’s a big deal and a welcome move in higher ed circles. Peller says that aspect of the plan may be the most important, enabling borrowers to have a more manageable repayment structure.

Biden’s plan also said it would publish a list of colleges with a bad track record of leaving their students with high debt and bad outcomes. It’s not necessarily a new idea. The Department of Education has for years published the College Affordability and Transparency List and the College Scorecard, to little effect.

The Biden administration also vowed to keep trying to “double the maximum Pell Grant and make community college free.” The latter idea was part of the original Build Back Better Bill but quickly got shot down by Republicans and moderate Democrats as too expensive.

5. It still leaves Black borrowers with disproportionately more debt

The argument: Criticism of the plan hasn’t just come from the right. NAACP President Derrick Johnson said in a statement that the policy would still leave too many Black with crippling debt. “President Biden’s decision on student debt cannot become the latest example of a policy that has left Black people—especially Black women—behind,” he said. “This is not how you treat Black voters who turned out in record numbers and provided 90% of their vote to once again save democracy in 2020.”

What we know: The student debt crisis falls most harshly on Black Americans. Among 2016 graduates, for instance, roughly 40% of Black students left college with $30,000 or more in debt, compared with 29% of white students, 23% of Hispanic students, and 18% of Asian students, according to the PBS Newshour. The problem is even worse for Black women, who owe an average of $41,466 one year after graduating from college. That’s compared to $33,851 for white women and $27,606 for Asian women, according to the American Association of University Women.

It’s not clear what Biden could have done to reduce the disparity, but it’s a reality that will continue to reverberate around the country. The administration also emphasized how the $20,000 forgiveness for Pell Grant recipients will largely aid borrowers of color. A recent study found that roughly 72 percent of Black full-time undergraduate students are Pell Grant recipients.

6. It’s an abuse of executive power

The argument: Beyond the merits of the proposal, there’s a debate about whether such a move was within Biden’s scope of authority, and the plan is expected to face legal challenges in the courts. The 1965 Higher Education Act grants the president the power to cancel student loans, but the question is whether he can do so on such a sweeping level, or whether it’s limited to more targeted relief.

What we know: President Biden himself once cast doubt on whether he could unilaterally forgive billions of dollars worth of loans. “I don’t think I have the authority to do it by signing with a pen,” he said in February 2021. House Speaker Nancy Pelosi, of California, agreed with him. “People think the president of the United States has the power for debt forgiveness,” she said in July 2021. “He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.”

While some scholars argued that Biden did have such authority under the 1965 statute, the administration has cited a different law that they say gives them the discretion to enact broad loan forgiveness.

The Heroes Act, passed after the Sept. 11 attacks, gives the secretary of education the power to “waive or modify” any provision of the law “in connection with a war or other military operation or national emergency.” Because former President Donald Trump declared the Covid-19 pandemic a national emergency, and Biden extended it, the White House argues it could use the law to freeze student loan repayments and cancel a portion of the federal education debt.

There are already theories circulating on social media that either outcome—the courts upholding the executive action or striking it down—would be a political winner for Biden. If the move ends up being thrown out by the federal judiciary, going as high as the 6-3 conservative majority Supreme Court, it would generate a wrath of progressive outrage and could motivate larger turnout in the coming elections.

Of course, that’s just a theory. But it is easier to take a gamble when there’s reason to believe you can still win by losing. While there’s no telling yet how the issue will play out in the courts or on the political battlefield, it has no doubt inserted something of a Rohrschach test into American politics. Washington still has a long way to go before finding out how the country will ultimately respond.

Contact us at letters@time.com.