As President Joe Biden delivers another reprieve this week for student-loan borrowers from monthly repayments, analysts are casting the move as an election-year gambit and predicting he’ll do it again before voters head to the polls on Nov. 8.
Biden on Wednesday said a pause for federal student-loan repayments, which had been scheduled to end May 1, now will run through Aug. 31.
“The August timing could make political sense because it gives the administration and Democrats a chance to make another high-profile extension announcement in the summer, closer to Election Day,” said Ian Katz, an analyst and managing partner at Capital Alpha Partners, in a note.
“The political benefits of appeasing the student debt constituency are obvious,” Katz added. “The economics are more debatable. But these decisions will be based more on politics than economics.”
Greg Valliere, chief U.S. policy strategist at AGF Investments, made a similar point, saying in a note that “still another extension, as the Nov. 8 elections approach, is likely in late July.”
The student-loan pause “will benefit about 40 million debtors. That’s a lot of voters,” Valliere also said.
In announcing the pause in a statement, Biden cited a Federal Reserve analysis that suggested “millions of student loan borrowers would face significant economic hardship,” if loan payments were to resume on schedule in May.
The reprieve aims to “enable Americans to continue to get back on their feet after two of the hardest years this nation has ever faced,” the president said.
Multiple reports on Tuesday said an extension announcement would come Wednesday.
Influential Democratic Rep. Alexandria Ocasio-Cortez of New York reiterated her call for canceling all student loans as she reacted to Biden’s decision — and she questioned the political benefits of the latest pause.
“I think some folks read these extensions as savvy politics, but I don’t think those folks understand the panic and disorder it causes people to get so close to these deadlines just to extend the uncertainty. It doesn’t have the affect people think it does,” she said in a tweet.
“We should cancel them,” AOC added, referring to student loans.
Republicans are widely expected to regain control of the U.S. House of Representatives in this November’s midterm elections, with betting market PredictIt giving an 85% chance for that outcome.
The GOP is getting good odds for taking back the U.S. Senate, too, as PredictIt puts them at 77%.
This report was first published on April 6, 2022.