Strategists warn of midterm ramifications after Biden announces $300 billion student loan handout

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Biden student loan handout attempt to buy support: Rove

Fox News contributor Karl Rove slams President Biden’s student loan handout plan as a ’sign of desperation’ to win back favor ahead of midterms.

Some strategists are warning of major ramifications for President Biden after he announced a plan Wednesday that would result in taxpayers footing the bill for an estimated $300 billion worth of student loan debt handouts for millions of Americans as the November midterm elections loom.

As previously reported, Biden's plan will cancel $10,000 of federal student loan debt for certain borrowers making less than $125,000 per year, and up to $20,000 for Pell Grant recipients, while extending the pause on federal student loan payments through the end of the year.

According to the Penn Wharton Budget Model, a one-time maximum debt forgiveness of $10,000 for borrowers who make less than $125,000 will cost around $300 billion for taxpayers.

Speaking to Fox News Digital about the implications of Biden's decision, strategists from both sides of the aisle offered their analysis on how the student loan debt forgiveness will affect the November elections.

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President Biden speaks during a signing ceremony for the CHIPS and Science Act at the White House, Aug. 9, 2022. (Saul Loeb/AFP via Getty Images)

"Student loan ‘forgiveness’ is a massive debt transfer from the working class, including blue collar and minority workers, to disproportionately upper income people," said Kristin Tate, a columnist at The Hill and a fellow at Independent Women's Voice. "The Democrats have become desperate ahead of the midterms and realize they cannot run on their track record of failures – this is their last ditch effort to 'buy' the votes of young people."

Tate also insisted Biden's decision will "anger blue collar workers, who used to make up the backbone of the Democratic Party."

"These voters feel completely alienated and forgotten about by today’s left wing political class," she said. "Democrats are no longer the party of working class Americans. The party of JFK – and even Bill Clinton – is dead."

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Offering a similar viewpoint to that of Tate's, Mike Shields, founding partner of Convergence and former Republican National Committee (RNC) chief of staff, insisted the decision will largely impact working families.

"Canceling student debt for wealthy families while working families continue to shoulder the burden of their terrible policies is right in line with what has put them in this terrible position in the first place," Shields said.

A sign asking President Biden to cancel student debt is posted on Pennsylvania Avenue near the White House, July 27, 2022. (Jemal Countess/Getty Images for We, The 45 Million)

"Democrats are staring down a massive defeat in November in no small part due to their spending policies in Washington that have created record-high inflation and soaring gas and grocery prices," Shields added. "And their response to this pending defeat has been to throw gasoline on the fire with even more spending and higher taxes on working families in the middle of a recession."

In contrast, Kevin Walling, a Democratic campaign strategist and former Biden campaign surrogate, insisted the president's decision will have a "minimal" impact on the midterm elections.

"The Biden Administration’s action on federal student loan forgiveness is likely to have a minimal impact on November’s midterms," Walling said. "This is something the president campaigned on and will make a major difference for Americans struggling under loan debt."

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Walling said the forgiveness of the loan debt from the Biden administration is an attempt to "counter higher costs" Americans are seeing at grocery stores and gas stations.

"There’s no question that the midterms will be decided by the state of the economy and how voters are feeling about inflation and rising prices, despite continued job growth and raising wages," he added. "With Democrats single-handedly extending ACA healthcare subsidies for millions of Americans as part of the Inflation Reduction Act and the actions taken this week by the Biden Administration on student loans, Democrats are hoping that these additional resources will help individuals and families counter higher costs at the pump and grocery store."

President Biden waves after returning to the White House, Wednesday, Aug. 24, 2022. (AP Photo/Susan Walsh)

The RNC is also pushing back against the move from Biden, calling the move an "irresponsible bailout" in a statement to Fox News Digital.

"Biden is using hardworking Americans to line the pockets of the wealthy with handouts amid 40-year high inflation and a recession," said RNC spokesperson Emma Vaughn. "This irresponsible bailout shows how desperate Democrats are for votes, and Republicans will ensure Americans know where Biden's priorities lie come November - anywhere but with the American people."

"In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023," Biden wrote in a tweet Wednesday.

President Biden is expected to deliver remarks on the move Wednesday evening at the White House.

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Fox News did not receive a response from the Democratic National Committee.

Fox News' Brooke Singman contributed to this article.