Can President Joe Biden cancel his student loan debt by his own order? Senate Majority Leader Chuck Schumer, DNY, said in several press conferences that Biden could erase such debt “with a flick of the pen.”
Canceling student debt of up to $ 50,000 has been a rallying call for many young Democrats who see their ability to borrow for homes or cars to be negatively impacted by the heavy burden of student debt. As of January 2021, 44.7 million Americans were in debt on student loans. summarized According to the Federal Reserve, $ 1.73 trillion.
As a 2020 presidential candidate Biden promised “Forgive all federal undergraduate student debt from two- and four-year public colleges and universities, as well as private (historically former black colleges and universities) and (minority service institutions) for debt holders earning up to $ 125,000 “.
Biden’s approach was not as aggressive as many activists and some Democratic officials would have liked, and Biden did not include funding for student loan forgiveness when he posted his FY2022 presidential budget proposal in May 2021.
Critics of student debt write-offs, especially the more aggressive ones, argue that it would be unfair to Americans who skimp on paying off their student loans.
The White House said Biden is continuing to study the matter. He has asked Education Minister Miguel Cardona will prepare a memorandum of his legal authority to cancel student loan arrears, and Biden will also said he would like Congress must take action.
However, Biden set some limits. In the town hall in February he said he is “willing to write off a $ 10,000 debt, but not ($ 50,000) because I don’t think I have the authority to do so.”
However, Sumer and his allies continue to exert pressure.
On June 9, Schumer joined forces with Senator Elizabeth Warren, Massachusetts, actor and activist Alyssa Milano, and the NAACP’s #CancelStudentDebt Voices an event organized by the Student Debt Crisis Group.
– Chuck Schumer (@SenSchumer) June 9, 2021
Is Schumer right that Biden can cancel his student loan debt? Since this is the subject of legal debate and ultimately subject to judicial decisions, we will not measure it in our measure of truth. However, we found that the problem is not as clear as Schumer says.
The key provision cited by supporters of abolition of education is from the Higher Education Act, which was originally signed in 1965 and has been updated since then.
Specifically, the law empowers the presidential administration, through the education minister, to “enforce, pay, compromise, refuse, or release” federal government student loans. Indeed, the Higher Education Act gave President Donald Trump and Biden the authority to suspend student loan payments during the coronavirus pandemic.
However, experts disagree over whether the president can authorize a massive debt cancellation by his own decree. According to experts, there are enough legal issues for any step taken by the president, most likely, would trigger a lawsuit.
“There are cases where presidential executive orders are rejected in court because they are taking actions that were not permitted in the past by laws,” said Jason MacDonald, a political scientist at West Virginia University.
MacDonald said the Trump administration has seen a similar legal rebuff over the initial travel ban for people from Muslim-majority countries.
While modest efforts to reduce student debt may not pose a legal hurdle, “the more ambitiously that power is used, the more likely a legal dispute is likely,” said Judith Scott-Clayton, professor of economics and education at Columbia University.
One contentious issue may be past congressional amendments to the Higher Education Act that mentioned narrow conditions under which student debt could be written off. In the past, federal law has dealt with debt relief for teachers and public sector workers, school closures before a student earned a degree, and student death or disability. It’s not so clear whether the general forgiveness will pass the legal test, experts say.
Likewise, the Higher Education Law’s power to “compromise, refuse or release” has generally been used in the past for loans only in unusual circumstances, on an individual basis, and for loans that are not expected to be repaid. Despite the large debt loans of many recent graduates, it is unclear if all of their loans will be considered bad loans.
“Compromise” is usually used when someone cannot pay a debt to the government, so the government makes a deal, ”said Adam Looney, senior fellow at the Brookings Institution. “This is very different from mass rejection.”
Meanwhile, another law, the Federal Claims Collection Act, empowers federal agencies to collect or review claims and suspend or terminate claims collection activities.
However, this law “sets high standards for cases where the government can jeopardize the debt, for narrow circumstances, such as when the debtor cannot pay and this failure is verified, or when the cost of collecting the debt is too high to justify the collection.” said Looney.