Biden could forgive thousands of dollars in student debt without Congress. Here’s how
President-elect Joe Biden could forgive thousands of dollars in student loan debt when he takes office in January — and he wouldn’t necessarily need help from Congress, although there’s a looming possibility of legal challenges if he takes the executive route.
How? The Higher Education Act of 1965.
The act, which started the federal student loan program, gives the U.S. Secretary of Education the power to forgive student debt, according to Forbes. And some experts argue it gives the president the ability to use an executive order to direct the U.S. Department of Education to “broadly discharge debts” for student borrowers without a vote in Congress, The New York Times reports.
But others argue that only Congress — which has the “power of the purse” — can decide to forgive student loan debt, according to Forbes, which notes any such executive action from Biden would likely be challenged in court..
Traditionally, student loan forgiveness could be achieved through legislation passed through Congress, Forbes reports. Legislative action, however, is unlikely if Republicans keep control of the Senate — which will be determined by a pair of January run-off elections in Georgia — and “broad student debt cancellation seems improbable” without action from Congress, the Times reports.
The CARES Act, the coronavirus relief bill passed in March by the Republican-controlled Senate and Democratic-controlled House, paused principal and interest payments on federal student loans through September.
In August, President Donald Trump suspended payments through Dec. 31, citing the Higher Education Act.
Push for student debt forgiveness
Discussions on student loan debt forgiveness have escalated amid the 2020 election and its aftermath.
In a Nov. 3 interview with The.ink, Democratic Senate Minority Leader Chuck Schumer of New York suggested Biden should forgive $50,000 of student debt through an executive order and said his first 100 days in office “ought to look like FDR’s.”
Schumer and U.S. Sen. Elizabeth Warren of Massachusetts in September proposed a resolution calling for the next president to eliminate $50,000 in federal debt for all borrowers.
“The President of the United States has the power to broadly cancel student loan debt, help close the racial wealth gap, and give a big boost to families and our economy,” Warren said in a statement. “It’s time to use this existing authority and permanently improve the lives of tens of millions of Americans.”
Other Democratic lawmakers have taken to Twitter in recent days to push for student loan forgiveness.
U.S. Rep. Ayanna Pressley of Massachusetts tweeted Monday that “student debt cancellation is a racial justice issue.” U.S. Rep Chip Roy, a Republican who represents Texas, said in a reply to Pressley that student debt cancellation is “leftist nonsense.”
Economists told CNBC that student loan debt “contributes to the racial wealth gap” and disproportionately affects women and younger generations.
Rep. Alexandria Ocasio-Cortez of New York also tweeted her support for student loan forgiveness.
Student loan borrowers owe roughly $1.77 trillion total as of Tuesday, according to the nonprofit Student Debt Crisis. About 45 million people in the United States owe student loan debt, Forbes reports.
Biden’s stance
When asked about student debt forgiveness on Monday, Biden said “it does figure into my plan.”
“For example, the legislation passed by the Democratic House calls for the immediate $10,000 forgiveness of student loans,” he said while delivering remarks in Wilmington, Delaware. “It’s holding people up. They’re in real trouble. They’re having to make choices between paying their student loans and paying rent, those kinds of decisions.”
In March, Biden came out in support of a coronavirus-relief proposal that sought to cancel $10,000 in federal student loan debt per borrower. .
Biden is unlikely to “jam through a measure with a price tag of around $420 billion” — the projected cost of that plan — without legislative action, according to the Times.
Additionally, he hasn’t publicly supported Warren’s and Schumer’s $50,000 proposal, and two people involved in his transition told the Times “his views had not changed.”
This story was originally published November 17, 2020 at 12:51 PM.
