Democrats ramp up pressure on Biden to cancel student loans
Democrats are increasing pressure on President Joe Biden to cancel student loans.
Here’s what you need to know.
After Biden extended temporary student loan relief for a third time, some Democrats in Congress want the president to enact a sweeping cancellation of student loans. While they welcome the 90-day extension of student loan relief, what they really want is the cancellation of student loans. Senate Majority Leader Chuck Schumer has tweeted several times, “Today would be a great day for President Biden to cancel student loan debt.” Student loan cancellation next? Well, it depends what happens next.
Why Democrats believe Biden has the authority to call in student loans
Progressive members of Congress, including Schumer, Sen. Elizabeth Warren (D-MA), Rep. Alexandria Ocasio-Cortez (D-NY), Rep. Ayanna Pressley (D-MA), and others argue that Biden has established authority, to enact wide cancellation of student loans under the Higher Education Act, 1965. In particular, Section 432A of the Higher Education Act refers to the power of the Department of Education “to alter, compromise, waive or release any right, title, claim, lien or demand acquired, including any equity or right of redemption, if any.” These legislators believe the statute gives Biden an unlimited right to call in an unlimited number of student loans for an unlimited number of student-loan borrowers. A major problem that often gets lost in tweets and soundbites is that not everyone is eligible for student loan forgiveness. (Here’s who doesn’t get student loan forgiveness). If their interpretation is correct, then they believe there is a clear roadmap to terminating student loans today without further approval from Congress. (How your student loans can qualify for $1.7 billion in student loan forgiveness from the Navent Settlement).
Student Loan Forgiveness: Biden and Others Disagree He Has Authority
Biden agrees that up to $10,000 in student loans should be canceled, but he says Congress should pass legislation to give relief to millions of student loan borrowers. (Here are 5 key changes for student loans in 2022). However, Congress has not passed legislation on large-scale student loan cancellations. Why? There can be several reasons. First, Democrats hold a slim majority in Congress, particularly in the US Senate, where Democrats and Republicans each control 50 seats. Second, foreclosure on student loans is not universally popular (even among Democrats) beyond the progressive arm of the Democratic Party. Third, senators like Sen. Joe Manchin (D-WV) or Sen. Kyrsten Sinema (D-AZ), among other more politically moderate or conservative senators, could face the narrow majority preventing the passage of broad-level student loan legislation. Biden also said he doesn’t think he has the authority to enact a large-scale cancellation of student loans without further approval from Congress. House Speaker Nancy Pelosi (D-CA) agrees with Biden, saying only Congress, not the President, has the legal authority to enact large-scale cancellation of student loans. However, Biden has canceled $12.7 billion in student loans through student loan forgiveness. (Student borrowers will receive a $15 billion cancellation on student loans).
Student Loan Forgiveness: Congress has 3 options
If Democrats want to push for a large-scale slashing of student loans, they have three main options:
- Continue the status quo to pressure the President via social media.
- Seek the passage of student loan cancellation legislation that can create consensus across all political channels.
- Pass alternative student loan facilitation legislation that could include student loan waivers or other facilitations receiving support from Democrats and Republicans.
Unless Congress changes course, there is unlikely to be a large-scale cancellation of student loans. While the president could try to enact student loan cancellations, there is currently no evidence that he will. The greatest risk is potential legal challenges to the president’s authority to act, which could delay or prevent the implementation of a large-scale forgiveness. Some say Democrats will lose the midterm election without student loan forgiveness, while others say student loan forgiveness may be the reason Democrats lose the midterm election.
Student Loans: Your Next Steps
With the ongoing uncertainty surrounding student loan forgiveness, don’t expect any. Prepare as if it’s not coming, which is the safer approach so you’re not caught off guard. Instead, focus on exploring all of your student loan repayment options. Here are some examples to pay off student loans faster: