Can Joe Biden Forgive Student Debt Without Congress? Experts weigh

This is a pressing issue not only for higher education experts and lawyers. Tens of millions of Americans have a lot to fear for the answer: Can the President cancel student debt without Congress?

If the president were able to write off student debt without passing a law, in theory borrowers could see their balances reduced or eliminated overnight. On the other hand, the chances of Congress agreeing to cancel the loans are uncertain at best. In general, Republicans do not support debt cancellation.

For now, it’s also an open question whether President-elect Joe Biden has an interest in testing his presidential power in this way.

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During the 2020 Democratic presidential primary, Massachusetts Senator Elizabeth Warren pledged to cancel student loans in the early days of her administration, including with her announcement an analysis written by three legal experts, based on the draft on predatory student loans from Harvard Law School, which described such a move as “legal and permitted.”

Biden, however, didn’t go that far.

A spokesperson for the president-elect would not comment on whether Biden has taken a position on whether or not he can cancel student debt without Congress, pointing to remarks made by Biden at a recent press conference after that he was asked if he would take the action branch to cancel the loans.

“They have real problems,” Biden said of student borrowers. “They have to make choices between paying their student loan and paying rent, those kinds of decisions. It should be done immediately.

Biden said he would write off $ 10,000 in student debt for all borrowers, and the rest of the debt for those who attended public colleges or historically black colleges and universities and earn less than $ 125,000 a year. In total, that would reduce the amount of outstanding student loans in the country by about a third, according to calculations by higher education expert Mark Kantrowitz.

Biden is under increasing pressure to go further.

Sen. Chuck Schumer, DN.Y., and Warren in September called on the next president to forgive every borrower $ 50,000 in student loans upon entering the White House. In an interview earlier this month with The.Ink, Schumer said Biden could cancel the debt “with the pen rather than with the legislation.”

More than 230 organizations and nonprofits, including Americans for Financial Reform, the NAACP, and the National Consumer Law Center, signed a letter Nov. 18, calling on Biden to cancel student loans on his first day as President.

“To minimize the damage to the next generation and help narrow the racial and sexual wealth gap, bold and immediate action is needed to protect student borrowers,” the groups wrote.

The student loan crisis has been particularly painful for black borrowers, with nearly 85% of black college graduates carrying student debt, compared to 69% of white college graduates. And because of racial wealth and income inequality in the United States, black borrowers suffer from higher default rates and are also in debt much longer than their white peers. Meanwhile, two-thirds of the country’s outstanding student debt is carried by women.

Even before the pandemic, when the country was in the midst of its longest economic expansion in history and unemployment rates were at their lowest in half a century, more than one in four student borrowers were either in default. , or in default of payment. A survey found that 58% of registered voters are in favor of canceling student loans and over 820,000 people have signed a Change.org petition titled “Donald Trump / Joe Biden: Erase Student Loans!”

The legal arguments over whether or not a president can repay the debt quickly become complicated.

CNBC asked Toby Merrill, founder and director of the Predatory Student Loans Project at Harvard Law School, how she would explain to a 15-year-old why she thinks it’s in the president’s power to do so.

“The Constitution gave Congress the power to control government property, such as debts owed to it,” she wrote.

And Congress, Merrill said, has granted the Secretary of Education, who works for the president, “specific and unlimited power to create and write off or modify debt owed under federal student loan programs.” .

The same question was posed to Luke Herrine, Ph.D. candidate for Yale Law School, who first argued in 2017 that the US Department of Education could write off student debt.

“Basically it’s like the power a prosecutor has to determine whether to lay charges against someone – the prosecutor might think that someone has committed a crime but decide not to prosecute them for for some reason, ”Herrine said.

In other words: The president could work with the US Department of Education to stop collecting on student loans from people, supporters of the argument say.

Others are not convinced that bypassing Congress to write off the debt would be successful.

“Using an executive order to forgive federal student loans will likely result in a trial and a preliminary injunction, and ultimately fail,” Kantrowitz said.

“Moreover, trying this route immediately after taking office would block any attempt to work with Congress in a bipartisan fashion,” he added.

Ryan D. Doerfler, professor of law at the University of Chicago, can also see such a move encounter a myriad of challenges. For example, he said, opponents may say that the US Department of Education can only provide relief to borrowers under specific circumstances.

Still, those potential hurdles shouldn’t stop the president from trying it out, Doerfler said.

“Congress does not seem at all interested in taking such steps,” he said, and therefore, “better to pursue debt cancellation through executive action than to pray that Mitch McConnell changes his mind ”.

Beyond the legal struggle, other critics of the Student Debt Jubilee say it would not significantly boost the economy, as college graduates tend to be higher earners who would likely redirect their monthly bills to higher earners. savings rather than spending more.

Merrill disagrees.

Borrowers need help more than ever, she said.

“People affected by the coronavirus, people whose incomes have been cut or who work on time, are struggling under the burden of student debt,” Merrill said.

The US Department of Education has offered people the option of putting their student loan repayments on hold until January. Almost all borrowers took it: Less than 11% of those with federal student loans pay their bills during the pandemic, according to data analyzed by Kantrowitz. In a recent Pew survey, 58% of borrowers say it would be difficult for them to resume payments next month.

Despite its benefits, some say a sweeping forgiveness would trigger a backlash among those who haven’t attended college, haven’t taken out loans, or have already paid off student debt. These borrowers “might think their frugality was being punished,” wrote Noah Smith, a Bloomberg columnist, this month.

At this argument, Herrine bristled.

“It’s like saying that providing a COVID vaccine is unfair to those who caught COVID before the vaccine,” he said.