As Biden rolls out ‘game-changer’ for student debt, Washington’s Marie Gluesenkamp Pérez offers rare Democratic dissent

WASHINGTON – In late May, Rep. Marie Gluesenkamp Pérez walked onto the House floor and voted against a policy she thought was bad for her southwest Washington district, whose residents had elected the freshman Democrat – after twice voting to send Donald Trump to the White House – in the biggest upset of last year’s congressional elections.

After talking with constituents in her largely rural corner of the state, where nearly three-quarters of adults don’t have a bachelor’s degree, she voted along with the House’s GOP majority to repeal President Joe Biden’s plan to spend an estimated $321 billion to erase student debt for some 43 million Americans.

When Biden announced the move ahead of the midterm elections last August, it fired up the disproportionately college-educated Democratic base, even as some left-leaning analysts warned it ran counter to the party’s progressive ideals by redistributing taxpayer money to Americans who will earn relatively high incomes over the course of their lives.

In a different era, Gluesenkamp Pérez’s vote might have been unremarkable, especially since she knew the president would veto the measure when it reached his desk. Instead, being one of only two House Democrats to take that symbolic vote put a target on her back.

From left-wing opinion pages to X – the site formerly known as Twitter – and even online reviews for the auto repair shop she runs with her husband in Portland, the congresswoman who had been celebrated months earlier by Democratic activists for defeating a far-right candidate in a conservative district was labeled a traitor to her party.

“It’s funny, I was not expecting it to blow up in the way that it did,” Gluesenkamp Pérez said in an interview Tuesday. “Just a few years ago, it was not the dogma of the party that you had to support student debt forgiveness. Suddenly, like, everybody’s got their marching orders from somewhere, and I guess I’m not on that email chain.”

After the Supreme Court struck down the one-time debt cancelation at the end of June, the Biden administration turned its attention to several other measures designed to relieve the burden of student loans. With loan payments set to restart in October after a three-year freeze, on Tuesday the White House kicked off a promotional blitz for the centerpiece of its approach, a new repayment plan that could dramatically reduce monthly payments for borrowers.

While Gluesenkamp Pérez supports some parts of the administration’s plans, such as fixing the troubled Public Service Loan Forgiveness program, she said Biden’s repayment plan still benefits people who will earn more over the course of their lives at the expense of those who will earn less.

Instead, she wants to see more targeted student debt relief paired with investments in K-12 and technical education, so that teachers earn more and college isn’t the only path to prosperity in the United States.

“I want to see our high school diplomas being the gold standard,” Gluesenkamp Pérez said. “I want someone to be able to be a shop class teacher for more than five years before they have to go, you know, work for the dealership where they can make three times more.”

As Democrats strive to keep the White House, win back the House majority and defend their tenuous hold on the Senate in 2024, their success will depend largely on winning over the kind of working-class voters who backed Gluesenkamp Pérez after voting for Trump. While Biden and his allies in Congress have enacted a raft of economic policies aimed in part at creating jobs that don’t require a four-year degree, the student debt issue could make it harder for the Democrats to expand their base beyond the college-educated.

Can the Biden administration ‘SAVE’ higher education?

On June 30, the Supreme Court’s conservative majority blocked Biden’s effort to forgive student debt outright – as much as $20,000 for students from low-income families and up to $10,000 for others.

The court’s six GOP-appointed justices ruled that a 2003 law that gave the education secretary the power to “waive or modify” laws for borrowers affected by “a war or other military operation or national emergency” didn’t mean the administration could erase billions in student debt because of COVID-19 – especially when Biden had declared the pandemic “over” in September 2022. The three justices nominated by Democratic presidents dissented.

The ruling was no surprise to observers of the court, but Biden – who has reportedly had concerns about outright debt cancelation – told the 26 million people who had applied or were automatically eligible for the relief that he shared their frustration.

“I know there are millions of Americans in this country who feel disappointed and discouraged, or even a little bit angry, about the court’s decision today on student debt,” the president said after the ruling. “And I must admit I do, too.”

Gluesenkamp Pérez said she has heard from constituents who made major financial decisions based on the expectation that their debt would be wiped out. She worries the administration made a cynical move to motivate voters, she said, “Wanting to make the Supreme Court or the Republican majority the enemy. And a lot of people with student debt became collateral damage in that fight to build political animosity.”

The backlash to the court’s decision overshadowed an array of other moves the Biden administration has made to lighten the burden of student loans, which together could have a profound impact for past, present and future university students.

On the day of the Supreme Court ruling, the White House announced it would try a different path to outright debt cancelation through a lengthy rulemaking process that won’t conclude until after the 2024 elections. Katharine Meyer, a fellow at the nonpartisan Brookings Institution’s Brown Center on Education Policy, said that while any new debt cancelation policy is likely to face its own legal challenges, that process is clearly within the authority of the Education Department.

At the same time, the administration has worked to clean up existing repayment and debt forgiveness plans that had suffered from mismanagement and bureaucratic problems, resulting in a total of $116 billion in student debt cancelation for 3.4 million Americans, according to the White House.

That includes $39 billion for 804,000 borrowers who had been on income-driven repayment plans for more than 20 years; $45.7 billion for 662,000 people in public service jobs; $10.5 billion for 491,000 borrowers with a total and permanent disability; and $22 billion for nearly 1.3 million borrowers who, according to the White House, “were cheated by their schools, saw their schools precipitously close, or are covered by related court settlements.”

The centerpiece of the administration’s approach to tackling student debt is the SAVE Plan – short for “Saving on a Valuable Education” – which calculates payments based on a borrower’s income and family size, not the amount they owe.

On Monday, a day before the administration kicked off a campaign to tell the nation about the new plan, White House domestic policy chief Neera Tanden told reporters it would free an indebted generation to make moves that could benefit the entire economy.

“This plan is a game-changer for millions of Americans,” Tanden said, “many of whom are putting off having children, buying their first home or even starting a business because they can’t get out from under their student loans.”

Meyer said the SAVE Plan is also a more comprehensive approach than one-time debt forgiveness, which wouldn’t address ongoing affordability problems in higher education. It could also help people who choose careers with relatively low pay despite requiring college or even graduate degrees.

“The government recognizes that not everybody will go into a high-paying career, and they want to have a path forward for folks to do the important jobs in society that don’t get paid as much but are nonetheless very important to the functioning of society,” she said, “whether that is being a journalist and supporting the free press or being an early-childhood education teacher and supporting 3-year-olds’ development.”

Under the SAVE Plan, which effectively replaces an existing plan called “REPAYE,” borrowers with undergraduate loans will have their monthly payments reduced to 5% of any discretionary income that exceeds 225% of the poverty line. Under the previous plan, borrowers had to pay 10% of discretionary income – the money left over after paying necessary expenses such as housing and food – over 150% of the poverty line.

The payment for loans taken out for graduate school will remain 10% of discretionary spending, and those who have both undergraduate and graduate loans will pay a weighted average between 5% and 10% based on the original principal balances of their loans.

On Monday, Education Secretary Miguel Cardona gave reporters an example to illustrate what this change could mean for Americans with student debt.

“Take a nurse earning $77,000 a year, married with two kids,” he said. “With SAVE, their payment will drop from $267 a month to just $40 a month. That’s over $2,700 a year in savings. This is real money President Biden is putting back into the pockets of working families.”

Borrowers who earn less than 225% of the poverty line won’t be required to pay anything. For a single person with no children in 2023, that means an annual income under $32,805 – roughly what someone making $15 an hour would earn in a year. Under a new application to be launched in September, the Education Department can pull that information automatically from a borrower’s latest tax return.

Under the SAVE Plan, interest also won’t accrue so long as a borrower makes the required payments, even if a payment is less than the interest that accumulates each month.

Regardless of how much debt someone has, those payments will continue no longer than 25 years, with the remaining balance forgiven. For those with only undergraduate loans, the payments last a maximum of 20 years, and only 10 years if the original loan balance was under $12,000.

Because the administration is implementing the new plan in phases, however, the reduced payments won’t go info effect until July 2024. Meanwhile, loan payments are set to restart in October after a more than three-year freeze that has cost billions each month. To ease the transition back to those payments, the administration is implementing a 12-month grace period until Sept. 30, 2024, during which missed payments will not be considered delinquent, placed in default or reported to credit bureaus or debt collection agencies.

Is it fair to forgive student debt?

“SAVE won’t just benefit today’s borrowers – it will also benefit millions of future students by making college more affordable,” Cardona told reporters Monday. “We know college graduates, on average in the course of their life, earn over $1 million more than students who graduated with a high school degree.”

But those benefits come at a cost to U.S. taxpayers, more than 62% of whom don’t have a bachelor’s degree, according to the Census Bureau. Sandy Baum, a senior fellow at the nonpartisan Urban Institute, said that raises a fundamental question of fairness, because the SAVE Plan, like one-time debt forgiveness, could redistribute money from those who will earn less in their lifetimes to those who will earn more.

“They’re modifying the repayment system in such a way that it’s so incredibly generous that most people will never have to repay all their debts, no matter what,” she said. “That’s sort of a way around it, and arguably a worse way around it than doing what they had hoped to do.”

The SAVE Plan’s total price tag is unclear, with 10-year estimates ranging from $138 billion – the Education Department’s projection – to $475 billion, according to a Penn Wharton Budget Model analysis. That cost could grow as the plan itself enables students to borrow more and schools to charge higher tuition, Baum said, and may endanger the plan’s sustainability.

“It will provide the incentive for people to borrow as much as they possibly can,” she said.

“It’s going to be so expensive that it could kill the program in the long run. That would be a shame, because income-driven repayment is really important to protect people whose earnings are low. But if you design it so that almost nobody is going to have to repay their debts, then it’s just going to become so expensive that it becomes an arbitrary grant program.”

After growing up in Houston, Texas, Gluesenkamp Pérez earned a bachelor’s degree in economics from Reed College in 2012. She covered tuition by working three part-time jobs and taking out federal loans she has since repaid, she said.

The congresswoman said she values her time at the liberal arts school in Portland, which she credits with helping her think critically and become a better writer, but she added, “It’s also an incredible amount of money, and you just don’t understand that as an 18-year-old.”

The idea that going to college is the best option for everyone, she said, “Sort of raises my hackles a little bit.” When she was dating her now-husband, Dean, who was working as a mechanic, she was put off by how other students reacted to his line of work.

“It seems like a lot of college is about being able to get the right job connections and sort yourself into this pool, and ultimately I decided that’s not what I wanted,” she said. “So many of my classmates at Reed were so condescending about him, and it really turned me off from feeling like I wanted to count myself among that – you know, affiliate in that way.”

After she graduated, the couple opened an auto repair shop in Portland. Dean still owns and operates the business, which the congresswoman had to legally separate from after her election to comply with conflict-of-interest laws, because they bought the building with a loan from the Small Business Administration.

Gluesenkamp Pérez said she has sympathy for people saddled with student loans, including some of her own friends and family, but she concluded that Biden’s debt cancelation would hurt people in her district more than it would help.

She cited an analysis of federal data by the National Association for Independent Colleges and Universities that shows Washington’s 3rd Congressional District accounts for only 3% of student loan debt in the state. The 5th District, home to Spokane, and the 7th District, which covers most of Seattle, each account for about 31% of that debt.

“This is not a policy that’s tailored to deliver value to my district, and I didn’t think it was striking the structural reform that we all are desperate for,” she said. “And this is not just about, like, ‘I didn’t get my share of the pie.’ We can’t just give out party favors at the expense of structural reform and expect things to get better for our kids and the next generation.”

Gluesenkamp Pérez also pointed to a June 2023 report from the Progressive Policy Institute, a center-left think tank, that estimated the debt forgiveness plan would have benefitted Washington, D.C. – where the average adult would have had $2,224 forgiven – more than every state except Georgia. Washington state ranked 46th on the list, with the average adult standing to get $1,412 forgiven.

The congresswoman said student debt has come up often at the 10 in-person town hall meetings she has held in the district since taking office – something her Republican predecessor, Jaime Herrera Beutler, famously avoided.

“I’m very eager to have this conversation,” she said. “The reality is when these issues come up at the town halls – and they do all the time – I’ve gotten a lot of support, I’ve gotten a lot of encouragement from my constituents on this.”

The SAVE Plan is likely to face legal challenges. Congress could also try to block it, although Biden would veto such a move, as he did when centrist Senate Democrats voted with Republicans to repeal debt forgiveness in June.

In the lower chamber, Gluesenkamp Pérez is nearly alone among Democrats publicly opposed to spending so much taxpayer money to erase student debt. In private conversations, she said, others in her party have shared concerns about student loan forgiveness. “A lot of Democrats agreed with me, but they were like, ‘I just had to vote this way, because it’s the voting population.’”

She recalled an interaction with one activist for debt forgiveness who, when the congresswoman said she would rather spend the money to put air conditioners in K-12 schools, told her, “Kindergarteners without A/C don’t vote.”

The only other House Democrat who voted to repeal the one-time forgiveness plan was Rep. Jared Golden of Maine, who leads the centrist Blue Dog Coalition along with Gluesenkamp Pérez and Rep. Mary Peltola, D-Alaska. In response to a news story that criticized his vote, Golden bristled in an Aug. 18 statement on X, formerly known as Twitter.

“Sadly, this is what radical leftist elites are learning about ‘democracy’ these days – silence and destroy anyone who disagrees with your views or goals,” he said. “I stand by my vote and my opposition to forking out $10,000 to people who freely chose to attend college.”

Gluesenkamp Pérez has struck a different tone, even as she has faced similar criticism from left-wing writers and activists. An Aug. 10 column in Slate, taking aim at her student debt vote, argued she “is not at all what her backers expected.”

The congresswoman – who ran on a platform that paired gun rights with abortion rights, focusing on the district’s rural areas as much as the suburbs around Vancouver – sees her vote as consistent with the promises she made to voters. She said she hopes her fellow Democrats can craft policy to bolster K-12 and technical schools while targeting student debt relief to those who need it most.

“I think that there are parts of the income-driven repayment that actually can contribute to a more progressive tax policy, and there are parts that I think are a mistake,” she said.

“I just hope that we can look at the real economics behind this. Let’s make data-driven decisions for the benefit of our whole communities, not just individual voting blocs.”

In the meantime, Baum said borrowers should apply for the SAVE Plan, even though she believes the policy should be improved. Information on the SAVE plan and how to sign up for it can be found at the following website: studentaid.gov/idr.