On The Money — The looming threats to Biden’s student loan wipeout

Karl Evers-Hillstrom
·5 min read
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President Biden’s student loan forgiveness plan is facing new issues from outside the White House that could limit its appeal to voters. We’ll also look at a much better day for the stock market and the SEC’s crypto settlement with Kim Kardashian.

But first, learn more about the high-profile sedition charges levied against the Oath Keepers.

Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane and Karl Evers-Hillstrom. Someone forward you this newsletter? Subscribe here.

Lawsuits, shrunk eligibility take shine off relief plan

President Biden’s student loan forgiveness plan hit multiple road bumps last week, leading to the administration ultimately scaling back eligibility, excluding hundreds of thousands of borrowers from its relief plan.

  • The administration was confronted with the first round of lawsuits against the program.

  • A tough score from the Congressional Budget Office elevated concerns over its cost.

The White House has downplayed both issues in an attempt to keep voters enthusiastic about forgiveness. But they also abruptly updated the program to exclude borrowers with federal student loans not held by the Education Department.

“There’s so much fear going on, so many borrowers are already calling, rushing to us, ‘What does this mean for me?’ It was very abrupt to have, ‘Today is the day we announce it and the day that is the last day to consolidate within minutes of lawsuits coming out,’” said Natalia Abrams, president of the Student Debt Crisis Center.

The Hill’s Alex Gangitano has more here.

DOW GOES UP

Stocks rebound after steep September plunge

U.S. stocks rallied after weeks of brutal losses Monday, capping off the first trading day of October with solid gains across the market.

  • The Dow Jones Industrial Average closed Monday with a gain of more than 765 points, rising 2.7 percent on the day.

  • The S&P 500 rose 2.6 percent before the closing bell and the Nasdaq composite capped off the day with a gain of 2.3 percent.

The context: Stocks rebounded Monday after weeks of rising recession fears among investors and concerns about the likelihood of steep Federal Reserve rate hikes.

  • The U.K. government announced Monday it would scrap a proposed series of tax cuts that triggered a meltdown in British financial markets last week. 

  • Experts feared the proposed budget, which also included energy subsidies and cuts to public services, would pour fuel on inflation in the U.K. while also leaving poorer Britons without sufficient ways to support themselves during a recession.

  • Stocks also got a domestic boost after a Monday report from the Institute for Supply Management (ISM) showed a slowdown in manufacturing activity and price pressures — two factors that could lead the Fed to a slower pace of interest rate hikes.

Sylvan breaks it down here.

REALITY BITES

SEC settles with Kim Kardashian over Instagram promo

The Securities and Exchange Commission (SEC) on Monday announced a $1.26 million settlement with Kim Kardashian for promoting a cryptocurrency while not disclosing the company paid her for the promotion.

The SEC said online cryptocurrency company EthereumMax paid Kardashian $250,000 for publishing an Instagram post on June 13, 2021, touting the company’s selling of “Emax tokens,” but Kardashian did not disclose the payment in violation of the Securities Act.

“This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors,” SEC Chair Gary Gensler said in a statement. “We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”

Here’s more from The Hill’s Zach Schoenfeld.

HAVE YOU NO DECENCY?

Supreme Court to hear challenge to Big Tech’s Section 230 liability protections

The Supreme Court on Monday agreed to hear two cases this term on whether social media companies can be held financially responsible for hosting terrorist content.

The family of Nohemi Gonzalez, a 23-year-old U.S. citizen killed during a 2015 series of Islamic State terror attacks in Paris, sued YouTube parent company Google, arguing the video sharing site not only provided a platform for videos containing terrorist content, but also recommended the videos to users.

The breakdown: 

  • Section 203(c)(1) of the Communications Decency Act says companies like YouTube, Google and Twitter are generally shielded from liability for information uploaded by their users, but the case, Gonzalez v. Google, asks whether it should apply when tech companies make “targeted recommendations.”

  • The family alleges that YouTube algorithms allowed “hundreds of radicalizing videos inciting violence and recruiting potential supporters” to be targeted to users of the platform.

The Hill’s Julia Mueller fills us in here.

Good to Know

Republicans have retaken the lead on the generic congressional ballot amid rising economic concerns among voters, according to a new Monmouth University poll released on Monday.

Eighty-two percent of Americans pointed to inflation as their top priority, while 68 percent said that jobs and unemployment were the most important factors for their vote.

Here’s what else we have our eye on:

  • The head of the Congressional Progressive Caucus on Monday took a shot at the Democrats’ handling of legislation that would have barred lawmakers from trading stocks, accusing party leaders of botching a process that should have been “a no-brainer” before the midterms.

  • The Supreme Court on Monday weighed whether to limit the scope of the country’s clean water regulations in a case that could have a far-reaching impact on the nation’s water quality.

  • United Airlines is suspending service at John F. Kennedy International Airport in New York City as it continues negotiating with the Federal Aviation Administration to expand its schedule at the airport.

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.

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