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Student debt forgiveness continues to loom over Biden

Yahoo Finance's Rick Newman discusses rising student debt costs and the options the Biden administration is evaluating to address the crisis.

Video transcript

[MUSIC PLAYING]

AKIKO FUJITA: Well, student loans have long been a burden for Americans, but the pain doesn't end there. Higher taxpayer costs for student loans have soured since Congress paused student loan repayments in 2020, complicating the case for forgiving student loan debt. Let's bring in Yahoo Finance's Rick Newman, here with us at the desk. And Rick, the clock ticking yet again for the Biden administration, as we look to the end of the month. What are they going to do?

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RICK NEWMAN: I think there's no doubt they're going to delay these student loan repayments once again. I mean, this originally was part of the CARES Act in 2020, the very first piece of COVID pandemic relief. And then President Trump and President Biden have extended this deadline five times. And it defies imagination at this point that Biden's going to let that deadline expire two months before the midterm election. So I think it's very likely that that deadline is going to get extended prior to the end of 2022. So if you have a student loan, you may not be having to make those payments until next year.

BRIAN CHEUNG: Now this has been a bit of a struggle for the Biden administration, right? Throughout 2022, there were talks that they were going to forgive, they weren't going to forgive, the volume of the forgiveness here. I mean, how much of a political issue is this headed into the midterms for the Biden administration, knowing this could be a key demographic?

RICK NEWMAN: It's a big issue mainly because a lot of young people who supported Biden in 2020 feel ripped off. I mean, they feel like Biden said he would forgive some student debt, and he hasn't done anything. Now let's be clear about what Biden actually said he would do. Biden does not favor as much debt forgiveness as some Democrats, such as Bernie Sanders or Elizabeth Warren, who would go-- Bernie Sanders would forgive all of it and make college free, and Elizabeth Warren said let's forgive up to $50,000.

So Biden said that's too much. He favors 10,000 in debt forgiveness. But-- key thing here-- he wants Congress to do it by passing a law. And Democrats don't have the votes to do that. So that's why some Democrats are pressuring Biden now to do some kind of student debt forgiveness by executive action, which he doesn't want to do, clearly.

AKIKO FUJITA: You mentioned the midterms. I mean, you've said for a long time that you think student loans could be an issue in play, especially for younger voters. There's a lot of developments that we've seen from this administration over the last few weeks-- obviously, what happened with the Supreme Court, what happened with the CHIPS Act, now potentially this Inflation Reduction Act. And then of course, yesterday, we got that announcement on the Al Qaeda leader being killed. I mean, has the momentum shifted for the Democrats at all?

RICK NEWMAN: Absolutely. Now, I don't know if that means that will get them more votes in November, but yeah, I mean, so killed an important Al-Qaeda leader who had a role in the 9/11 terrorist attacks 20-- more than 20 years ago, let's point out. They still were going after this guy. And then Biden had to-- he had one important legislative win with the CHIPS Act, which Congress passed, and then the Inflation Reduction Act.

Now that has not passed yet, let's be clear about this. But analysts are giving it about a 75% likelihood that it will pass. So if it does, Biden will suddenly be able to say, look, I am getting some things done. And that's the case for re-electing Democrats and letting them keep control of Congress.

A really important thing here is turnout. So it's not just how do voters feel, but to go back to younger voters, will they even bother to vote is a big question. Of course, you know, turnout drops during midterms sometimes by quite a lot. And some of those younger voters who wanted some action on debt relief might say, you know, you've done nothing for me. So I'm just going to sit this one out.

AKIKO FUJITA: The enthusiasm is still on the Republican side.

RICK NEWMAN: I don't know. We'll see.

BRIAN CHEUNG: Yeah. Three months until the midterms as a reminder. Oh, and by the way, there are some primaries I think today as well.

RICK NEWMAN: Yeah, today, yep.

BRIAN CHEUNG: Yahoo Finance's Rick Newman, thanks so much.