President Joe Biden has stalled on broad student-loan forgiveness, and lobbying by student-loan companies might explain why.
Biden said on the campaign trail that if elected, he'd seek to "immediately" wipe out at least $10,000 in student debt for every federal borrower, a move that advocates say is in his authority. But over a year into his presidency, Biden has failed to deliver on that pledge, leaving borrowers like Rob frustrated.
"I know that I'm going to have to start making payments," Rob, who's studying to become a teacher and did not want to disclose his full name for privacy reasons, told Insider. "Teachers don't make a lot, and it's going to have a big impact on me, already just on my quality of life."
Indeed, the 34-year-old, along with about 45 million other Americans who took out federal loans for their higher education, will have to resume loan payments on May 1 when the Biden administration's pandemic pause expires.
"It's upsetting because you vote for Democrats, and they honestly never really follow through with their promises at all," Rob said. He owes about $60,000 in student debt and said he won't vote in this year's midterm elections unless the president follows through with $10,000 in cancellation.
"I would be shocked, and I'd be thrilled to go to the voting booth if they do do it," he added. "But right now they need to earn my vote, and right now they're not doing it."
The White House has been slow to take sweeping measures on student-debt cancellation as Biden questions his legal ability to do so and punts the responsibility to Congress. In the meantime, the student-loan companies that process the record-breaking $1.7 trillion debt have poured money into lobbying and politicians' war chests to oppose broad cancellation — spending that could provide some clarity on Biden's inaction.
Recent Democratic-led efforts to stanch the flow of money into politics have tanked. Yet despite spending and lobbying, experts say there is a glimmer of hope for advocates fighting for student-debt cancellation to push back.
"This is an interesting sort of David and Goliath battle," said James Thurber, a political scientist at American University who teaches an ethics and lobbying seminar, "where David is winning on a few things but not over the entire policy change."
Student-loan companies spend millions to keep their industry alive
Why Biden has not pursued broad student-debt forgiveness is unclear, but the student-loan industry's wide-reaching influence on politics might shed some light on the administration's position.
Student-loan companies spent nearly $4.5 million on lobbying efforts last year, according to OpenSecrets, a nonprofit that tracks campaign-finance and lobbying data. The industry lobbied against student-loan payment pauses during the pandemic, along with student-debt issues in Biden's COVID-19 stimulus package last year. In 2020, the industry spent about $4 million on lobbying.
The federal government hands out contracts to these companies to service student loans to borrowers. In exchange, companies earn fees for each loan they service.
Navient, previously one of the largest federal student-loan servicers, spent nearly $1.7 million on lobbying last year and earned $717 million in profits. (Mired in decades of controversies and allegations of misleading borrowers, Navient received approval from the Education Department in October to shut down its federal-loan services at the end of last year. The company has consistently denied wrongdoing but recently reached a settlement with 39 attorneys general over accusations of abusive practices.)
Another major student loan company, Nelnet, spent $230,000 on lobbying in 2020. That same year, Nelnet made over $352 million in profits. Nelnet did not return Insider's request for comment.
"They're lobbying to make sure that they have profit. They're not lobbying for the public interest of students, in my opinion," Thurber told Insider. "They're interested in the bottom line."
Navient, in its 2021 midyear lobbying report, said the company had rallied behind a variety of student-debt-related issues, including improving loan-repayment programs, assisting borrowers in default on their debt, and easing the process for bankruptcy discharges. The company did not provide comment for this story.
Student-loan companies, through political action committees, are also major donors to political campaigns. In 2020, the industry donated about $715,000 to candidates, with the money evenly split between both parties, according to OpenSecrets.
Biden was the top recipient of contributions from student-loan companies in 2020, with $38,535, followed by his opponent, former President Donald Trump, who got $25,716.
"Our concern is always that monied interests have a much bigger presence and effect on policy," Dan Auble, a senior researcher at Open Secrets who focuses on lobbying data, told Insider.
This spending isn't new. According to Open Secrets, student-loan companies have exhausted more than $47 million on lobbying the federal government and nearly $5.5 million on campaign contributions over the past decade, seeking to prevent student-debt policies that run counter to their interests.
"There are other forces at work that are also influencing what's happening. So it's certainly not the only factor, but you can be fairly certain that the business interests involved in the student-loan issue are having their voices heard," Auble said.
Rep. Virginia Foxx of North Carolina, the highest-ranking Republican on the House Education and Labor Committee, has received nearly $30,000 in contributions from student-loan companies over the past two election cycles. She recently decried Biden's extension of the pause on monthly loan payments and has opposed student-debt cancellation.
Foxx did not return Insider's requests for comment.
Democrats fail to reduce the power of money in politics
The power of lobbying does not appear likely to weaken any time soon. Since Biden took office, Democrats have unsuccessfully sought to curb the influence of money in politics. The For the People Act, an elections and campaign-finance overhaul that passed the House last year but was blocked by the Senate, would have tightened ethics laws for federal officials and lobbyists.
Specifically, the legislation would have slowed the so-called revolving door of government officials who become lobbyists for the industries they previously oversaw, which rely on their insider knowledge and connections to push forward their interests. More than half of the lobbyists in the education industry have walked through the revolving door, OpenSecrets has found.
"Lobbyists are actually writing legislation and pieces of legislation. They have relationships with the people on Capitol Hill and in the White House and the executive branch. They often have passed through the revolving door," Auble said. "They have a good idea of how to put pressure on the various levers of government. So it's clear that the close to $4 billion that is spent on lobbying each year is having some effect on policy."
Current law maintains that former senior-level government officials should hold off for a year until they engage in lobbying. The For the People Act would have doubled that waiting period to two years, as many officials often defy the current rules.
The bill would have also increased transparency by closing what's known as the "shadow lobbying" loophole, which refers to individuals who attempt to influence policy, for example, by meeting lawmakers or advising lobbying firms, but who are not actively registered as lobbyists.
"There's a lot of people on the Hill lobbying and meeting the definition of lobbying," Thurber said, "but they're not registered, and that's wrong. It needs to be enforced more."
Yet the over 800-page legislation failed in the Senate because Republicans widely opposed the bill, and Democrats could not overcome the 60-vote filibuster requirement.
"Mitch McConnell said he would not take up anything" in the bill, Thurber, who's personally in favor of increased transparency around lobbying and worked on reforms during the Obama administration, told Insider. "There were things in there on lobbying that even many Republicans in the Senate wanted, but no one is touching it because that's what his position is as the minority leader."
"I think the strategy of the minority party in the Senate is no — no on everything," he continued.
Many Americans have long held perceptions that corporate, wealthy interests and lobbyists hold too much power over policymaking, contributing to distrust in the federal government. Democratic, Republican, and independent voters have all expressed support for cleaning up political corruption.
Transparency around lobbying is important "because in a democracy, you have to have trust in the institutions that are making your laws," Thurber said. "If you've got all kinds of vested, narrow interests, having an influence and you don't know about it, it really undermines democracy, fundamentally."
The public can still wield influence over policy
Republicans balk at broad student-debt forgiveness, saying Americans would bear the brunt of the costs in the form of lost government revenue from loan payments. Canceling $10,000 in federal student debt per borrower would cost about $373 billion, according to Brookings. On the other hand, Democrats backing student-debt cancellation say the move would stimulate the economy and decrease the country's racial wealth gap.
Both sides — those in favor of debt cancellation and those against — have pushed Biden to act in their favor. Yet substantial progress on student-debt reform under his administration could ultimately depend on which competing force wins out.
Grassroots activism can prove effective if done correctly, experts say. Social-media campaigns, on-the-ground advocacy, advertising, connections on Capitol Hill and the White House, and clear messaging, are strategies that can influence policy decisions, Thurber said.
Standing against the student-loan companies is a slew of advocacy groups, labor unions, and nonprofits, as well as dozens of Democratic lawmakers who have championed the issue. At least 18 nonbusiness organizations, such as the Bipartisan Policy Center, American Civil Liberties Union, and the American Federation of Teachers, lobbied for student-debt cancellation in 2021, OpenSecrets found.
"Money alone doesn't always counteract popular organization for a particular position," Thurber told Insider. "Money does buy access. It doesn't always buy the policy that you want though."
In the student-debt arena, some of that campaigning has paid off. For instance, under immense public pressure, Biden extended the loan-payment pause, set to end in February, another 90 days until May 1.
Once a far-fetched idea, student-debt forgiveness has gone mainstream in recent years, as the debt climbs to historic highs, borrowers struggle to pay their loans, and political candidates, including Biden, promote policies to address the crisis. Americans appear to be on board, with a majority of respondents repeatedly saying the government should cancel at least some of the $1.7 trillion debt, according to polling.
"Sometimes the public good wins and overcomes campaign contributions and lobbying expenditures. It's rare, but sometimes it does," Thurber said.
Forgiving the debt could energize voters ahead of this year's midterms and potentially offer Biden a boost to his approval ratings, which have slumped to 41% amid inflation woes and the continuing COVID-19 pandemic.
Biden stalls on a campaign pledge
When pressed on the president's failure to enact $10,000 in student-debt cancellation, the Biden administration has recycled a response: touting already-implemented relief, deferring to Congress, and at times sidestepping the issue.
"The President supports Congress providing $10,000 in debt relief. And he continues to look into what debt relief actions can be taken administratively," a White House spokesperson said in a statement to Insider.
Senate Majority Leader Chuck Schumer and Sen. Elizabeth Warren of Massachusetts, two leading Democrats supporting student-debt cancellation, have struck down the idea of crafting a bill to cancel student debt, saying such legislation would not succeed in today's partisan Congress.
Hundreds of advocacy groups, along with a slew of Democrats like Schumer and Warren, believe the responsibility to forgive student debt is Biden's. They argue that Biden can act on the same executive authority through the 1965 Higher Education Act that he used to extend the payment pause to eliminate student debt.
"The president already has the power to cancel $50,000 of student-loan debt. It's time for him to do that," Warren told Insider.
Braxton Brewington, a spokesperson for the Debt Collective, the nation's first debtors' union, told Insider that "$1.8 trillion of crushing student debt is a major policy failure that Biden can fix with the stroke of a pen."
Documents obtained by the Debt Collective found that the Education Department had completed a memo in April on Biden's legal ability to wipe out student debt. The White House has yet to release its results.
To be sure, Biden has not completely neglected the student-debt crisis. Some steps he's taken include canceling nearly $15 billion for targeted groups, such as those with disabilities and those defrauded by for-profit schools.
An Education Department spokesperson told Insider that while "we continue to deliver immediate relief for those struggling with debt, we are also making permanent changes that reduce indebtedness and make college more affordable."
"The department is also continuing to work closely with the White House to review additional options with respect to debt cancellation," the spokesperson added.
Megan Erickson, a Biden voter who has a five-figure balance in student debt that she calls an "embarrassingly large amount of money," said she'd like to see his administration buckle down on long-term solutions to the debt crisis, including making college more affordable and easing the loan-repayment process.
But, she added, "the idea of a reduction is so very appealing."
The $10,000 debt cancellation has "been an ongoing topic in our household," Erickson told Insider. "Could you imagine, what if this did happen? And then we'll go back and forth as to, well, if it did happen, where would it come from and how do we make it better for people going forward?"