The Biden student debt question: Will he or won't he forgive loans?
Justin Nelson's letter, one of the thousands that arrived at the White House this month, said he was proud to vote for President Joe Biden in 2020. Now he had a request: Would the president please honor a campaign promise and use the enclosed pen to wipe out thousands of dollars he owes in student loans?
The letter-writing campaign — #PensForBiden — is the latest attempt to sway Biden on a high-stakes dilemma as the midterm elections approach and much of his domestic agenda remains stalled: What to do about the $1.6 trillion that more than 45 million people owe the government?
So far, Biden has extended the pandemic pause on student loan payments four times, most recently until Aug. 31.
Payments have now been on hold for more than two years, over two presidential administrations.
But all that time poses problems. Many of the issues that have long bedeviled the loan system have only grown more complicated during the pause, and receiving bills again will infuriate and frustrate millions of people who feel trapped by a broken system and crushing debt.
Now some advocates believe Biden will have little choice but to do something that has divided his advisers: Wipe out thousands of dollars in debt per borrower with the stroke of a pen.
On Friday, the White House said it is considering forgiving at least $10,000 in student loans per borrower through executive action, according to people familiar with the matter, with momentum increasing as Biden seeks ways to bolster voter enthusiasm ahead of the November midterms.
“If they want a smooth transition to repayment, I think the only way to do that is canceling debt,” said Natalia Abrams, founder of the Student Debt Crisis Center, an activist
group that supported the letter-writing campaign. “I think we're at the point of no return on that.”
Perhaps the most concrete signal came last week: Reps. Tony Cardenas and Nanette Diaz Barragan, two California Democrats, said Biden had discussed loan relief during a meeting with the Congressional Hispanic Caucus on Monday.
The lawmakers said Biden had indicated that he was looking to provide some form of debt relief and was exploring his legal options.
“He's serious about it, and he's looking to do something,” Cardenas said. “He's looking to do something that we would very much like, and he's hoping to do it soon.”
Calls to cancel student debt have hung over Biden since before his presidency began, driven by borrowers and the progressive wing of his Democratic Party.
He backed the idea on the campaign trail in 2020. “I'm going to make sure that everybody in this generation gets $10,000 knocked off of their student debt as we try to get out of this god-awful pandemic,” he told an audience in Miami.
Senate Democrats lack the votes to help make good on that promise, leaving executive action as the only possible pathway. But close allies say some influential members of Biden's team have been reluctant for him to do it — some because they disagree with the idea of forgiveness and some because they don't believe he has the authority.
“He's got lawyers telling him he shouldn't,” said Rep. Jim Clyburn of South Carolina, the third-ranking House Democrat and a key supporter of Biden.
But Clyburn, the most senior Black lawmaker in Congress, said presidential actions had brought sweeping changes before, including Abraham Lincoln's Emancipation Proclamation and Harry Truman's order banning segregation in the military.
“If executive orders can free slaves and integrate the armed services, it can eliminate debt,” Clyburn said.
Forgiving $10,000 per borrower would require the government to write off $321 billion in loans, according to an analysis released by the Federal Reserve Bank of New York last week. A separate study by the bank found that surveyed borrowers reported a 16% chance of quickly missing a payment if the moratorium ended.
Nelson, a 32-year-old bank operations associate in Minneapolis, said the pause had freed up $120 a month for home repairs and other expenses.
“It's been a big change, and a relief,” he said.
A recent Morning Consult poll found that more than 60% of registered voters were in favor of some level of student debt cancellation. But despite Biden's campaign promise, his advisers have been divided, three people with knowledge of the discussions said.
Some view debt cancellation as relief for critical constituencies, said the people, who spoke on the condition of anonymity because they were not authorized to speak publicly. Others oppose it as bad policy or because they fear the economic effects of putting more money in consumers' pockets when inflation is soaring.