The Country’s Debt Ceiling is Some Students’ Floor

Education Policy Brief #81 | By: Steve Piazza | June 21, 2023
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On his first day in office, President Biden extended a “pause” on student college loan repayments as part of Covid relief efforts which had started in March, 2020 under Section 3513 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Since the January, 2021 Executive Order, the pause has been extended eight times. 

Meanwhile, two lawsuits as to the constitutionality of an Executive Order on student loan forgiveness that President Biden announced on August 24, 2022 have now made their way to the U.S. Supreme Court, which is planning on issuing a ruling soon. Regardless of how the USSC rules in the cases (Biden v. Nebraska and U.S. Department of Education v. Brown), the Biden administration has stated that the end of the pause is near, seeing its termination to come some time in August.

Leaving nothing to chance, Senator Ted Budd of North Carolina, added an amendment, S.Amdt.127 to the recent debt ceiling bill, formally known as H.R.3746  or the Fiscal Responsibility Act of 2023. The amendment purported to prohibit any further pauses in payment, but in the end it was never brought to a vote.   

The FRA was passed on June 6, 2023, and the debt crisis was avoided, but the fact that loan forgiveness language somehow still found itself included in a debt ceiling bill shows how far reaching the divisiveness of the loan forgiveness debate can go.


According to various estimates, over 38 million people owe more than $1.78 trillion on loans taken for college. The Biden administration’s forgiveness program calls for waiving up to $10,000 for individuals making $125,000 a year or less, and up to $20,000 for those who had received Pell grants. Eliminating debt for qualified borrowers could cost the government $400 billion dollars according to the Congressional Budget Office (CBO), while the Education Department puts that figure more at $305 billion.

President Biden’s announcement to forgive all or portions of qualified students’ loans came as a relief to some and an outrage to others. Republicans immediately sought to block the program and took the administration to court. 

This has left many borrowers confused and uncertain as to where they stand. 

The pause in payments may have prolonged the need for clarity, but once the pause is lifted, the smoothness of the repayment process is anybody’s guess.

Regardless of when the pause is removed, it still raises the question about how the pause found its way into the FRA at all. Perhaps it’s not surprising when we consider that the bill also includes other contentious items, among them a reduction in the amount allotted to the IRS for its tax revenue recovery effort, an increase in work age requirements for those receiving assistance for food and other necessities, and the retrieval of unspent covid relief funds. All these give cause for Republicans to claim victory.

One reason items like this end up in debt legislative discussions is clearly reflected in a press release by Senator Ted Budd (R-NC): “Throughout this process, I have said that we should only raise the debt ceiling if we fix Washington’s spending addiction. Unfortunately, this bill fails to do that.” 

In other words, any spending item can become a target. The problem here is that Senator Budd is conflating defaulting on what is owed with what is needed in the future. 

It should be noted that a request for a clarification received no response from Senator Budd’s office. Nonetheless, that argument is nothing new and surfaces every time a debt ceiling deadline looms. 

This of course has been written off as the nature of negotiations. As the President said, “No one got everything they wanted but the American people got what they needed.” There’s truth to this point as the bill has left a good part of the Inflation Reduction Act unscathed. 

But, a soundbyte such as this seems like it’s referring to federal debt crisis circumvention, when in reality the bill also includes other items that have been causing a divide between the two parties, and the country. For example, in addition to those stated above, Joe Manchin finally secured the removal of regulations holding up completion of the West Virginia Mountain Valley Pipeline. 

In the flurry of desperation amidst sounds of impending doom in the media, it’s easy to get the sense that the American public are all in that without a debt ceiling agreement, the economy would be seriously in danger. 

What isn’t so apparent is that it seems that anything on either side’s agenda, no matter how incongruous, becomes appropriate to place on the table and just get it done because it’s what’s best for the country. 

Many people who owe large sums of money for their education, may feel differently.

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