A new memorandum from the U.S. Department of Education says: the president cannot cancel student loans.
Here’s what you need to know – and what can this mean for your student loans…
According to the new legal memoThe US Secretary of Education has no legal authority to cancel student loan debt on a massive scale. This means that the new Minister of Education or even President-elect Joe Biden will not be able to cancel student loans for millions of student loan borrowers with a stroke of the pen. The non-binding memorandum provides legal arguments why only Congress can revoke student loans. While supporters of student loan abolition such as Senator Elizabeth Warren (D-MA) are likely to disagree with the memorandum, here are a few key arguments that are being proposed.
Canceling a student loan: the case for
Before watching reasons not to cancel student loansIt is important to highlight the many reasons for canceling student loans. Advocates Say Student Loan Cancellation Will Boost Economy, Help Borrowers save for retirement or buy a house, reduce inequality and save a generation from financial ruin. There are various suggestions for canceling student loan debt, even if student loan cancellation was excluded from the latest incentive package… These proposals range from writing off $ 10,000 student loan debt to writing off all $ 1.7 trillion student loan debt for 45 million borrowers. What legal authority, if any, does the Minister of Education have to cancel student loan debt for all student loan borrowers? Warren and others argue that:
- The Higher Education Act of 1965 (which is the current law) gives the United States Secretary of Education legal authority to revoke student loans.
- According to them, the president already has legal authority to revoke student loans. They refer to Section 432 (a) of the Higher Education Act, which empowers the US Secretary of Education to “alter, compromise, waive or waive any rights, titles, claims, liens or claims, regardless of acquisition, including any capital. or any right to redemption. ”
Most recently, Warren and Senate Minority Leader Chuck Schumer (NY) urged Biden by decree cancel student loan debt up to $ 50,000 for every borrower who earns $ 125,000 a year. Today, Biden did not support this proposal.opting for cancellation of $ 10,000 student loan debt.
Why President Can’t Revoke Student Loans
According to a memorandum prepared by the Office of the General Counsel of the Ministry of Education, “we believe that [Secretary of Education] has no legislative power to cancel, compromise, annul or forgive on a blanket or bulk basis the principal balances of student loans and / or materially change the repayment amounts or their terms. ” The cheat sheet lists several reasons why student loans cannot be canceled en masse, including:
1. Congress controls spending (and canceling student loans is spending)
Of the three equal branches of government, only Congress can allocate federal spending. According to the US Constitution, “[n]o The money must be received from the Treasury, but as a result of appropriations provided by law.[.]“The Department of Education, like the president, is part of the executive branch. According to the memorandum, the executive branch on its own, without Congress, cannot make decisions on spending.
2. Congress would explicitly write that the president can cancel all student loans.
As the memo says, “Congress is not hiding elephants in a mouse hole.” (Gonzalez v. Oregon). If Congress really wanted to delegate all authority to the Secretary of Education to cancel the millions, billions, or trillions of dollars in student loan or student loan debt, Congress would explicitly write the law as such. On rare occasions, Congress may write laws vaguely enough to authorize the executive branch unilaterally. cancel student loan debt – without Congress – for millions of student loan borrowers.
3. The Department of Education can cancel student loans, but only in limited cases.
Congress authorized the Department of Education cancel student loans under limited circumstances… Although the Minister of Education relied on this provision in canceling student loans, writing off most of the student loan debt was relatively small compared to current proposals for widespread student loan cancellations. For example, student loans can be canceled due to fraud, school closures, or complete or permanent disabilities. This means that student loan cancellations are done more on an individual basis than on a large scale. According to the memorandum, Congress may authorize the Department of Education cancel student loan debt for all student loan borrowers, but has not yet done so.
Biden called on Congress cancel $ 10,000 student loans immediately for each student loan borrower. Biden says he is unlikely to cancel student loans by his order. It is possible that student loan cancellation included in the new incentive package, together with $ 2,000 incentive checks… Alternatively, the cancellation of the student loan could be delayed if Congress limits the amount of the new incentive package and prioritizes other funding for the response to the Covid-19 pandemic. It is important to note that this memorandum is not legally binding and the future presidential administration may come to alternative conclusions. Congress can also pass legislation to abolish student loans, or it can pass legislation to give the president the power to cancel student loans. Until then, it is unlikely that Biden or the US Secretary of Education will unilaterally cancel student loans.
How to pay off student loans faster
What is the best way to pay off student loans? There is no guarantee that Congress will abolish student loans in a new stimulus package or in separate legislation. Even if student loan cancellation occurs, Congress has not finalized who is eligible for student loan forgiveness. This is why it is important for you to put together a student loan game plan now. Get started with these three options, all of which are free: