On Nov. 5 , the House passed a Senate-backed $1 trillion public-works bill, part of the Build Back Better plan, to be approved by President Joe Biden. This is separate from the nearly $2 trillion bill focused on social spending for education, health care, and climate change. The House is expected to debate this bill during the week of Nov. 15.
Student loan forgiveness isn’t included in Democrats’ massive $1.85 trillion spending billBY Sydney LakeNovember 09, 2021, 6:51 PM
In the entire $2 trillion that’s set aside in this budget reconciliation, there’s not one single mention of student loan forgiveness, which has been backed by several top Democrats including Sen. Elizabeth Warren and Senate Majority Leader Chuck Schumer. Biden had even promised on the campaign trail that he would wipe out $10,000 per student loan borrower.
Biden’s stance on student debt has been called into question, however, as the president has taken little action on mass student loan forgiveness. Education Secretary Miguel Cardona, though, has issued five rounds of student loan forgiveness this year totaling $11.2 billion, which helps disabled and defrauded borrowers, among others.
Without any mention of student loan forgiveness in the Democrat-backed $2 trillion reconciliation bill, what does that mean for the future of debt cancellation?
Democrats’ stance on student loan forgiveness
Many top Democrats are continuing to push Biden and the U.S. Department of Education to make moves on more widespread student loan debt forgiveness amid negotiations on the president’s Build Back Better framework.
“I think given how much [Build Back Better] has been slashed there is more opportunity than ever to bring the heat on Biden to cancel student loans,” U.S. Rep. Alexandria Ocasio-Cortez, a Democrat from New York, said in an Instagram story on Oct. 28.
Other student loan forgiveness proponents including Warren continue their fight. Schumer on Oct. 15 renewed his call for $50,000 in debt cancellation per borrower during “Scared to Debt,” an event hosted by the University of Southern California’s Casden Institute and School of Cinematic Arts.
“Student debt makes it harder to achieve the American dream—the sacred promise that if you work hard, if you play by the rules, that one day you’re going to make it here in America,” Schumer said during the event. “When people have to pay student debt, they sometimes have to put off buying a home, buying a car, getting married, or even going into the profession they wish to go into.”
Not all Democrats are sold on mass student debt cancellation, however.
“Broad student loan forgiveness is not supported by all Democrats,” student loan expert Mark Kantrowitz, author of How to Appeal for More College Financial Aid, tells Fortune. “Including it in the reconciliation legislation would have made that legislation more difficult to pass, in part because of the cost.”
Forgiving $50,000 per borrower (as Schumer and Warren have pushed for) would cost more than $1 trillion, Kantrowitz adds.
“Even $10,000 per borrower would cost $377 billion, a price tag that causes some policymakers to hesitate,” he says.
The cost could be reduced through offering targeted rounds of student loan forgiveness as opposed to broad debt cancellation, he says. For example, forgiving debt borrowers who owe just $10,000 or less would cost about $75 billion, Kantrowitz says.
There have already been several rounds of targeted forgiveness this year, but for particular types of borrowers including those people with total and permanent disabilities or who attended now-defunct schools.
Will Biden ever cancel student loans?
The lack of mention of student loan cancellation in the reconciliation bill “doesn’t really signal anything about the Biden Administration’s commitment to student loan forgiveness,” Kantrowitz says.
This largely has to do with the fact that a memo about Biden’s authority to implement broad student loan forgiveness has yet to be released, he adds. Rob Klain, Biden’s chief of staff, told Politico in April that the Education Department was preparing this memo, and at the time said he expected it to be released in just a few weeks.
While the full memo still hasn’t been released after seven months, The New Yorker on Oct. 29 first reported that a heavily redacted version exists. This version doesn’t show much other than the fact that the White House had the memo for more than six months without releasing any information to the public.
“The next step is unlikely to occur until after the final report is released,” Kantrowitz says. “The report is likely to find that broad student loan forgiveness requires an act of Congress, since only Congress has the power of the purse.”