Proponents of student loan forgiveness love to point out that President Biden’s Department of Education has already canceled nearly 10 billion dollars federal student loans this year. Senator Elizabeth Warren argues that this precedent clearly indicates that Biden has the power to cancel all federal loans by his own order.
“The President has the power to cancel student loan debt,” she said in a statement. recent MSNBC interview… “Do you know how I know this? Because President Obama did it. Because President Trump did it. And because President Biden did it. “
Senator Warren is wrong. In fact, the Biden administration’s cancellation of $ 10 billion in student loans proves the opposite: the executive does not have the power to cancel student loans unless Congress announces it.
More recently, the Department of Education canceled $ 1.1 billion in the form of federal student loans for 115,000 borrowers who attended the ITT, a now defunct commercial college network. The department repaid this debt under the protection of the borrower to maturity, a law created by Congress to allow borrowers who were defrauded by their colleges to receive debt relief.
The Biden administration has forgiven too USD 5.8 billion in loans for 323,000 borrowers with full and permanent disabilities, due to which they cannot receive significant income. Like borrower protection, full and permanent disability layoffs are a program expressly sanctioned by Congress. While at the Department of Education some discretion On how to implement these programs, the main authority comes from Congress.
Debt cancellation by order advocates point out that the Law on Higher Education empowers the Minister of Education to “enforce, pay, compromise, waive any rights, titles, claims, liens or claims, regardless of their acquisition”. This provision appears to give the secretary broad powers to cancel student arrears.
But, as noted by financial aid expert Mark Kantrowitz Notes (edit), another part of the charter limits the powers of the secretary. He has the right only to waive obligations to the US government “in the performance and in relation to the functions, powers and duties assigned to him by this part.”
In other words, the Minister of Education has the power to forgive student debts only when Congress gives them to him.
When President Biden canceled his student debt, he was always under a special program approved by Congress. Borrower protection is one example: Congress gives the education secretary the power to write off debts after cases of clear fraud. Congress also authorizes the Secretary to cancel debt when borrowers experience complete and permanent disability. Borrowers who have worked in the public service for ten years can also receive loan repayments.
In each of these circumstances, Congress created a special cancellation clause and required borrowers to meet certain conditions prior to receiving forgiveness. If the secretary really had broad powers to cancel student loans when he sees fit, Congress would not need to create specific programs such as the forgiveness of public service loans. The very existence of these programs proves the limited powers of the executive branch.
Of course, Congress could allow universal loan forgiveness if it wanted to. But politically, mass forgiving student loans is a bad idea. Most of the student debt is in the hands of people with higher incomes who do not need financial assistance from taxpayers. Moreover, debt forgiveness today will stimulate excessive borrowing tomorrow. Even after paying off most of the student debt, he won’t take long to bring the student debt portfolio back to its current level of $ 1.6 trillion.
There is best solutions… The federal government should help a subset of borrowers with serious repayment problems, but insist that doctors and lawyers with expensive degrees and high salaries pay back their loans in full. As the moratorium on student loans expires on January 31, policymakers should ensure that stranded borrowers make full use of existing social safety nets.
Congress can also eliminate unnecessary fees and penalties, simplify repayment plans, and help the lowest-income borrowers pay interest. Most importantly, Congress must curb future lending… The amount students can borrow from taxpayers should be limited, and colleges that make students unable to pay off accumulated debt should be fined.
The debate over whether President Biden can write off student debt with a flick of his pen is distracting. He may not, but there are better solutions on the table. Congress and the Department of Education must work together to make them a reality.