Borrowers hoping that President Biden will cancel student loans have had renewed hope this week.
Yesterday, White House Chief of Staff Ron Klain announced that Biden had asked his Education Secretary Miguel Cardona to compile a legal note outlining potential authorities that could serve as the basis for the enactment of widespread cancellation of student loans through executive action. Cardona was commissioned to study the viability of canceling student loans up to $ 50,000. This new assessment of legal authority to write off student debt would be in conjunction with a separate legal review that Biden asked Department of Justice attorneys to perform.
This is a potentially significant development. Student borrower activists, borrower advocacy groups and congressional progressives have been pushing Biden for months to use his executive authority to forgive student loans. House and Senate Democrats released a joint resolution calling on Biden to write off $ 50,000 in student loan debt. Hundreds of civil rights groups, consumer organizations and labor unions joined the campaign, as well as state attorney general offices and even municipalities.
But Biden was resistant. Although he expressed his support for the cancellation of student loans, he was not thrilled by the use of management action to pass such sweeping changes to the student loan system. Many student loan legal experts have argued that Biden had the power to enact widespread student loan cancellation using executive power, but Department of Education lawyers under former Secretary DeVos came to the conclusion. opposite conclusion. Meanwhile, Biden has expressed deep uncertainty about this use of unilateral executive action.
Additionally, Biden has always advocated for a smaller, “targeted” amount of student loan forgiveness – specifically $ 10,000. In December, Biden said it would be “unlikely” to write off or forgive $ 50,000 in student loan debt. Supporters of canceling $ 10,000 student loans argue that a lower level of forgiveness would target relief to low-income people. Postponement or cancellation of $ 10,000 in student loans would eliminate the unpaid student debt of more than 16 million people, or about a third of all current student borrowers. And that would halve the balances of an additional 9 million borrowers.
But defenders have argued that Biden needs to go much further. That Biden is seriously exploring the viability of enacting student loan cancellation through management action is a potentially good sign for student loan borrowers. This may reflect that Biden’s preference for Congress to pass a student loan forgiveness law could be a long shot given the narrow Democratic majorities in both chambers, an expected Republican flibust in the Senate, and the emphasis. currently on passing Biden’s infrastructure legislation, which will likely take months. Notably, Klain suggested that Biden explored legal authorities that would allow him to cancel student loans using executive action; Klain did not present the initiative as an effort to find a legal basis for opposite these efforts.
Additionally, the fact that Biden tasked the education department to specifically study the viability of canceling student loans up to $ 50,000 may indicate that the president is relaxing his opposition to a larger loan forgiveness amount. student.
But nothing is guaranteed at this point, and Klain has indicated that a decision could still be in weeks or more. Biden extended the moratorium on most federal student loan payments and interest until September 30, which gave him ample time to act, and earlier this week he enlarged temporary relief to encompass additional student loans.
Advocates for student loan borrowers have continued to advance their campaign to convince Biden to take drastic action, making the forgiveness of student loans a matter of racial justice. Disparities in student debt and academic performance disproportionately impact black students and latinox. Graduating students of color with more student loan debt on average than their white peers, owe more on their student loans even after years of repayment, and are more likely to fail on their student loans.
“The cancellation of $ 50,000 in student debt will significantly boost our economy, help close the racial wealth gap and provide relief to millions of struggling families,” Senator Elizabeth Warren (D-MA) said in a tweet. “President Biden should use his authority for #CancelStudentDebt.”
“Yes [the President] is serious about bridging the racial wealth gap, he must commit to large-scale, all-level student debt cancellation, ”said Rep. Ayanna Pressley (D-MA), l a major sponsor of the House resolution calling on Biden to write off $ 50,000 in student loan debt using executive action.
“The US bailout included a provision that ensures all types of student loan cancellations will not be taxed as income,” the Americans for Financial Reform said in a tweet, referencing a section of the draft. stimulus law recently passed by the president which supporters say will “trace the path»For the massive cancellation of student loans. “Reforming student credit is economic justice, gender justice, anti-racism and the way forward. #CancelStudentDebt. “