Economic activity

Democrats increase 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.

Student loans

After Biden extended temporary student loan relief for the third time, some Democrats in Congress want the president to enact large-scale student loan forgiveness. While they applaud the 90-day extension of student loan relief, what they really want is student loan forgiveness. Senate Majority Leader Chuck Schumer has repeatedly tweeted that “Today would be a great day for President Biden to write off student loan debt.” Is student loan forgiveness next? Well, that depends on what happens next.

Why Democrats Think Biden Has The Power To Forgive 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 Biden has power existing to pass a large scale student loan forgiveness under the Higher Education Act 1965. Specifically, Section 432A of the Higher Education Act refers to the authority of the Department of Education “to modify, impair, waive, or release any right, title, claim, lien, or demand, however vested, including any capital or right of redemption.” These lawmakers believe the law grants Biden a right unlimited forgiveness of unlimited student loans for unlimited student borrowers A main problem, which often gets lost in tweets and soundbites, is that not everyone will be eligible for student loan forgiveness (Here’s who will not get student loan forgiveness). If their interpretation is correct, they believe they have a clear roadmap to canceling student loans today without further authorization from Congress. (How Your Student Loans May Qualify for $1.7 Billion in Student Loan Forgiveness Under the Navient Settlement).

Student loan forgiveness: Biden and others disagree he has authority

Biden agrees that up to $10,000 in student loans should be forgiven, but he says Congress should pass legislation to provide student loan relief to millions of student borrowers. (Here are 5 major changes for student loans in 2022). However, Congress has passed no legislation on large-scale student loan forgiveness. Why? There can be several reasons. First, Democrats hold a narrow majority in Congress, particularly in the US Senate, where Democrats and Republicans each control 50 seats. Second, student loan forgiveness is not universally popular (even among Democrats) beyond the progressive arm of the Democratic Party. Third, given the narrow majority, senators such as Sen. Joe Manchin (D-WV) or Sen. Kyrsten Sinema (D-AZ), among other politically moderate or conservative senators, could block the passage of any legislation to large scale. student loan forgiveness. Biden also said he doesn’t believe he has the authority to enact large-scale student loan forgiveness without further authorization from Congress. House Speaker Nancy Pelosi (D-CA) agrees with Biden and said only Congress, not the president, has the legal authority to enact large-scale student loan forgiveness. That said, Biden canceled $12.7 billion in student loans through student loan forgiveness. (Student borrowers will get $15 billion in student loan forgiveness).

Student loan forgiveness: Congress has 3 options

If Democrats want to push for large-scale student loan cancellation, they can pursue 3 main options:

  1. Maintain the status quo to pressure the president via social media.
  2. Seek to pass student loan forgiveness legislation that can build consensus in the political aisle.
  3. Pass legislation on alternative student loan relief, which could include student loan forgiveness or other relief, that garners support from Democrats and Republicans.

Unless Congress changes course, large-scale student loan cancellation is unlikely. While the president may seek to enact student loan forgiveness, there is currently no indication that he will. The biggest risk is potential legal challenges to the president’s power to act, which could delay or prevent the implementation of any large-scale pardons. Some say Democrats will lose the midterm election without student loan forgiveness, while others say student loan forgiveness could be the reason Democrats lose the midterm election.

Student loans: your next steps

With the continuing uncertainty surrounding student loan forgiveness, you shouldn’t expect any. Prepare as if it won’t come, which is the safest approach to not being caught off guard. Instead, focus on exploring all of your student loan repayment options. Here are some examples for paying off student loans faster:

Student Loans: Related Reading

Is student debt cancellation the next step?

Student borrowers will get $15 billion in student loan forgiveness

Student loans will change in 5 major ways in 2022

Biden extended student loan relief, but advocates really want student loans forgiven