Can Biden really cancel student loan debt? Here’s where the debate stands
WASHINGTON — President Joe Biden has asked the Department of Education to study whether he can unilaterally forgive federally held student loan debt, raising hopes for roughly 45 million Americans who collectively owe $1.7 trillion.
But whether relief will come is still unclear.
Last year, both the Trump administration and Congress temporarily halted collection from certain student loan borrowers in response to the COVID-19 pandemic. Biden instructed the Education Department to extend that relief.
It has prompted renewed calls from some progressives to have the federal government forgive student loan debt. Backed by Senate Majority Leader Chuck Schumer, D-N.Y., they want Congress or the president to forgive up to $50,000 in student loan debt per borrower.
Where do things stand right now?
At a CNN town hall in February, Biden questioned whether he has the legal authority to write off the level of debt Congress is pushing for. He has stressed that he prefers Congress pass legislation.
“I’m prepared to write off a $10,000 debt, but not 50” thousand, Biden said. “Because I don’t think I have the authority to do it by signing the pen.”
Still, on April 1, he asked Education Secretary Miguel Cardona to research and draft a legal memo examining whether it’s within the president’s powers to cancel $50,000 in student loan debt. There’s no deadline for Cardona to present his findings.
If the department says Biden can act alone, he could sign an executive order instructing the Education Department to forgive the debt.
If the department says Biden cannot act alone, Congress could pass legislation forgiving student loan debt, and the White House has said Biden would gladly sign it. But Democrats hold slim margins in the House and Senate, and the issue tends to be politically unpopular with Republican lawmakers.
Under what authority would Biden forgive this debt?
That’s what the president is waiting for Cardona to answer.
Advocates point to a provision in the Higher Education Act of 1965 that, they argue, provides broad authority to the president, through the secretary of education, to “modify, compromise, waive, or release student loans.”
Others point to the Higher Education Relief Opportunities for Students, or HEROES, Act of 2003, which allows the secretary to waive or modify certain loan programs to ensure that people harmed during a presidentially declared national emergency “are not placed in a worse position financially.”
The Trump administration relied on that act to justify reducing student loan interest to 0% and deferring payments for the weeks before Congress passed the CARES Act, which explicitly told the Education Department to stop collecting payments on certain federally held student loans through September, to not charge interest during that time and to stop trying to collect payments from people already behind on their loans.
The administration again pointed to the HEROES Act to continue not collecting payments once the authority from Congress ended.
In the past, the HEROES Act has been used narrowly and applied to active-duty service members or to people affected by a natural disaster like a fire or flood, rather than broadly to the entire population.
What would forgiving student loan debt mean for the economy?
About 45 million Americans hold student loan debt, worth a combined $1.7 trillion. Most is federal student loans. Just under $200 billion is private student loans.
Borrowers typically hold between $20,000 and $24,999, according to the Federal Reserve’s 2020 U.S. households report. And they usually pay about $200 to $299 per month, according to the report.
Student loan debt is the second largest source of individual debt in the U.S., second only to mortgage debt. Roughly one-sixth of the U.S. population older than age 18 holds federal student loan debt. For those under 35, about onethird of the population has federal student loan debt.
Advocates argue that is keeping young people from buying homes and starting families until later in life.