Here’s where Biden stands on student loan forgiveness

BY Sydney LakeSeptember 01, 2021, 2:00 AM
A graduating Army veteran, center, is recognized for her service during the 53rd Commencements of the University of Massachusetts Boston at TD Garden in Boston, as seen in August 2021. (Photo by Craig F. Walker—The Boston Globe/Getty Images)

On the presidential campaign trail, Joe Biden promised to immediately cancel $10,000 in student debt per borrower. That hasn’t happened yet after more than eight months in the Oval Office. 

Borrowers are “having to make choices between paying their student loan and paying the rent, those kinds of decisions,” Biden said during a Nov. 16, 2020, economic recovery speech. Forgiveness “should be done immediately,” he added.

His tune changed when his tenure began, however.

Democratic leaders such as Majority Leader Chuck Schumer and Sen. Elizabeth Warren have pushed Biden to cancel up to $50,000 in debt for federal student loan borrowers, but he won’t budge. At a CNBC town hall on Feb. 17, 2021, Biden was posed the following: “We need student loan forgiveness beyond the $10,000 your administration has proposed—we need at least a $50,000 minimum. What will you do to make that happen?”

“I will not make that happen,” Biden responded. And he has been true to his word.

But hasn’t Biden already canceled some student loan debt?

Biden has canceled some debt, but it’s been a much more targeted effort than what other politicians want. Since March 18, the Biden administration has forgiven $9.5 billion in student loans—but to two main groups: disabled Americans and borrowers who attended now-defunct institutions.

While nearly $10 billion may sound like a pretty big chunk of change, those four rounds of forgiveness account for less than 1% of all federal student loan debt. As of the second quarter, federal student loan debt stands at $1.7 trillion.

“It’s hard to conceptualize, but it really is a tiny, tiny, tiny fraction of how much the government spends on other issues,” Cody Hounanian, executive director of the Student Debt Crisis Center, previously told Fortune. “It’s really a drop in the bucket when it comes to the broader student debt issue.”

Biden opposes mass debt cancellation because this would also help borrowers who attended Ivy League schools like Harvard University and Yale University—students who ultimately have stronger career and income trajectories. He has said he would rather see help go toward early childhood education and youth from disadvantaged circumstances.

Debate: Can mass debt cancellation even happen?

There has also been plenty of debate about whether Biden even has the authority to make mass student debt cancellation a reality. 

“I’m prepared to write off $10,000 debt, but not [$50,000] because I don’t think I have the authority to do it by signing” an executive order, Biden said during the February 2021 town hall. Just months later, in July, Speaker of the House Nancy Pelosi said this type of debt cancellation could be accomplished only by an act of Congress.

“People think that the President of the United States has the power for debt forgiveness,” she said. “He does not. He can postpone, he can delay, but he does not have that power.”

Other federal student loan forgiveness proponents argue, however, that mass debt cancellation can happen. Toby Merrill, the founder and former director of the Project on Predatory Student Lending, says that Congress granted the Secretary of Education authority to cancel or modify federal student loans. In mid-July, Merrill was appointed deputy general counsel in the Education Department’s office of the general counsel. During her 2020 presidential campaign, Warren proposed directing the secretary of education to cancel $50,000 of each borrower’s student debt, citing Merrill’s research.

“The power to create debt is generally understood to include the power to cancel it,” a letter to Warren from Merrill says.

There could be more “targeted” forgiveness coming

Biden said during that same town hall in February that he’s still on board with more targeted student loan forgiveness efforts, like helping public service workers. He and Sen. Bernie Sanders, an independent from Vermont, also support efforts to “ease the burden” of high monthly federal student loan payments. 

They propose stopping interest from accruing on federal loans for people earning less than $25,000 and capping monthly payments at no more than 5% of discretionary income for the same earning bracket. Remaining debt should be forgiven after 20 years, they also suggest.

“In this moment of economic pain and strain, we should be eliminating interest on the debts that are accumulated,” Biden said at the February town hall. “I understand the impact of the debt, and it can be debilitating.”

Biden has also publicly supported free community college, which he says would cost the federal government $109 billion. He has also said that any family making less than $125,000 per year should be able to attend a public university for free. This would also apply to students who attended historically Black colleges or universities (HBCUs).

“A good education should be a reliable pathway to the middle class,” he tweeted during his campaign. “But for too many, earning a credential or degree after high school comes with a mountain of debt or is out of reach altogether.”

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