Biden administration explores options to cancel student debt

President Joe Biden asked Education Secretary Miguel Cardona to prepare a report on the president’s legal power to write off up to $ 50,000 in student debt per borrower, White House chief of staff said , Ron Klain, in an interview with Politico on Thursday.

“Hopefully we’ll see that in the next few weeks,” Klain said of the memo. “And then he’ll look at that legal authority, he’ll look at the policy issues around it, and he’ll make a decision.”

During the election campaign, Biden said he supported the cancellation of the $ 10,000 student loan, but was under increasing pressure from Democratic Party members, advocates and borrowers to go further in setting aside $ 50,000 per person and doing so by executive action.

Although Biden in the past has expressed reluctance to bypass Congress to write off student debt, White House press secretary Jen Psaki suggested in February that the administration had not ruled out the possibility. On his first day in office, Biden extended a hiatus on federal student loan payments that has been in effect from March until next September.

Senate Majority Leader Sen. Chuck Schumer, DN.Y., said he came to the conclusion that Biden himself could write off $ 50,000 in debt.

“You don’t need Congress,” Schumer said. “All you need is a swipe of the pen.”

During the 2020 Democratic presidential primary, Massachusetts Senator Elizabeth Warren pledged to cancel student loans in the early days of her administration, including with the announcement of an analysis written by three legal experts, based on Harvard Law School’s Predatory Student Loans Project, which described the cancellation of student debt by executive action as “legal and permitted.”

Others say Biden would face legal challenges if he tried to pay off the debt himself.

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If it were determined that the president was able to write off student debt without passing a law, borrowers could see their balances reduced or eliminated overnight. On the other hand, the chances of Congress agreeing to cancel the loans are at best uncertain given the slim majority of Democrats.

“I think the administration is looking for a legally justifiable way to offload up to $ 10,000,” said A. Wayne Johnson, who was previously in charge of federal student loan debt at the US Department of education.

Upon his resignation in 2019, Johnson called for a $ 50,000 student loan forgiveness per borrower, saying the U.S. system was on the verge of predator and much of the debt would never be repaid.

There are more than 44 million student loan borrowers in the United States, and the country’s outstanding balance is expected to exceed $ 2 trillion by 2022.

If all federal student loan borrowers got $ 10,000 off their debt, the country’s outstanding education debt would fall to about $ 1.3 trillion, from $ 1.7 trillion, according to the higher education expert Mark Kantrowitz.

And a third of federal student loan borrowers, or 14.4 million people, would have their balances reset to zero.

In contrast, canceling $ 50,000 for all borrowers would reduce the country’s outstanding student debt balance to $ 700 billion from $ 1.7 trillion.

Meanwhile, the $ 50,000 plan would write off all the debt of 80% of federal borrowers, or 36 million people, Kantrowitz said.

Even before the pandemic, about a quarter of student borrowers were past due or in default.