How Biden might approach student loan forgiveness in 2022

BY Sydney LakeJanuary 11, 2022, 2:01 PM
President Joe Biden departs from the White House State Dining Room after speaking about the December 2021 jobs report in January 2022.
Oliver Contreras—Sipa/Bloomberg/Getty Images

In 2021, the Biden administration announced more than $11 billion in student loan forgiveness. While that may sound like a hefty amount, 2021 cancellations only accounted for about 1% of all outstanding federal student loan debt—which totals nearly $1.8 trillion today. Hundreds of thousands of borrowers will benefit from those rounds of forgiveness, but more than 43 million people still remain in federal student loan debt.

“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 a drop in the bucket when it comes to the broader student debt issue.”

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In 2021, top Democrats like Senate Majority Leader Chuck Schumer, Sen. Elizabeth Warren, and Rep. Alexandria Ocasio-Cortez pushed President Joe Biden to extend student loan forbearance—which was ultimately continued through May 1. What they still want from Biden, however, is wide-sweeping student debt cancellation. Biden hasn’t signed on to such a plan yet, though. 

“Although progressive Democrats, as well as student-debt activists, have continued to pressure the administration to use an executive order to cancel up to $50,000 for each borrower, Biden administration officials have resisted such demands,” Elizabeth Tandy Shermer, author of Indentured Students: How Government-Guaranteed Loans Left Generations Drowning in College Debt, tells Fortune. “The Education Secretary [Miguel Cardona] even called it wishful thinking in a fall press release.”

Could 2022 be the year for mass debt cancellation? Fortune spoke with student debt experts to get their take. 

The hopeful outlook

During his presidential campaign, Biden said he would support forgiving at least $10,000 in federal student loan debt per borrower. Since his inauguration, he’s made more targeted jabs at the student debt crisis, but his tune changed about all-encompassing debt cancellation. 

Biden isn’t so sure that he can accomplish mass debt forgiveness through an executive order, and he’s said he 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. 

Hounanian is hopeful, though, that mass debt cancellation could happen this year.

“We are looking at 2022 as the year that broad-based debt cancellation is made a reality, and we urge President Biden to use his authority to sign an executive action to do so,” Hounanian tells Fortune. “After some resistance, the president extended the pause on federal student loans until May 1—this is a positive sign that the administration better understands the experience of borrowers and the obstacles they face.”

Reality check

Other policy experts argue that Biden doesn’t have the executive authority to cancel student loan debt. 

“The president cannot implement new programs through executive action since only Congress has the power of the purse,” Mark Kantrowitz, author of How to Appeal for More College Financial Aid, tells Fortune. “If the president were to try to forgive $1 trillion in student loans through executive action, it would be met with a court challenge and ultimately fail.”

However, Congress is more likely “now than previously,” he says, to pass legislation that would implement mass student debt cancellation. That said, he expects that “some Democrats will balk at the cost of forgiveness.”

“With Democrats controlling Congress through the slimmest of margins, every Democrat has a veto,” Kantrowitz says. “So, it seems likely that broad loan forgiveness will be limited in amount and eligibility.”

More targeted relief

Other student loan experts believe we’ll see more targeted student loan forgiveness from Biden instead of wide-sweeping cancellations. 

“The Biden administration has a real track record now that we can look to and know how it thinks about awarding student loan relief,” Andrew Pentis, a certified student loan counselor with Student Loan Hero, previously told Fortune. “It’s been a track record of targeted relief to specific borrowers—not the mass forgiveness proposals that many progressives have called for.”

Shermer agrees: “Targeted relief seems more likely given the actions of the Education Department as well as official statements since Biden’s swearing in.” She adds that cancellation seems likely only for borrowers who attended now-defunct schools and public service workers; Biden has announced forgiveness for both. 

Other policy insiders previously told Fortune that we could perhaps see forgiveness for the following groups: borrowers in default and low-income borrowers; teachers and parents; and military and borrowers who “really cannot pay back those student loans.”

Shermer argues, though, that there needs to be a more concerted effort to help “the many Americans who were shown to be essential during the pandemic, even if they were technically working in the private sector. They also need their debts canceled—not forgiven—because no one did anything wrong by pursuing the education that betters the entire country’s workforce and helps people be more knowledgeable, engaged members of this country,” she says.

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