So far, the question has been raised as to whether President-elect Joe Biden has an interest in testing his presidency to try to forgive student debt.
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This is a pressing issue not only for higher education experts and legal associates. Tens of millions of Americans come up with the answer: Can the president forgive the debts of students without Congress?
If the president were able to cancel student debt without passing legislation, in theory, borrowers could see their balance shrink or eliminate overnight. On the other hand, the chances of Congress agreeing to simplify loans are uncertain at best. Republicans are generally not in favor of debt forgiveness.
So far, the question has also been raised as to whether President-elect Joe Biden has an interest in testing his presidency in this way.
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During the Democratic presidential championship in 2020, Massachusetts Sen. Elizabeth Warren vowed to forgive student loans in the early days of her administration, including with her message analysis written by three legal experts based on the Predatory Student Loan Project. at Harvard Law School, which described such a move as “legal and acceptable.”
However, Biden has not gone that far.
A spokesman for the newly elected president would not say whether Biden has taken a position on whether he can forgive student debt without Congress, citing remarks Biden made at a recent news conference after being asked if he would take executive action to cancel loans.
“They’re in real trouble,” Biden told borrowers. “They have to make a choice between paying their student loan and paying the rent, such decisions. This has to be done immediately.”
Biden said he would forgive a $ 10,000 student debt for all borrowers and the rest of the debt for those who attended public colleges or black colleges and universities and earned less than $ 125,000 a year. Overall, this will reduce the country’s outstanding student loan ratio by $ 1.7 trillion by about a third, according to estimates by higher education expert Mark Cantrowitz.
Biden is under increasing pressure to go further.
Senator Chuck Schumer, DN.Y., and Warren in September called on the next president to forgive $ 50,000 in student loans to each borrower as soon as he enters the White House. In an interview earlier this month for The.Ink, Sumer said Biden could cancel the debt “with the pen, unlike the law.”
More than 230 nonprofits, including the Americans for Financial Reform, the NAACP and the National Center for Consumer Protection, signed a letter Nov. 18 calling on Biden to cancel student loans on his first day as president.
“To minimize harm to the next generation and to help reduce disparities in racial and gender wealth, bold and immediate action is needed to protect student loan borrowers,” the groups wrote.
The student loan crisis is particularly painful for black borrowers, as nearly 85% of black college graduates have a debt for education, compared to 69% of white college graduates. And because of racial wealth and income inequality in the United States, black borrowers suffer from higher levels of default and are also stuck in debt much longer than their white peers. Meanwhile, two-thirds of the country’s outstanding student loan debt is borne by women.
Even before the pandemic, when the country was in the midst of its longest economic expansion in history and unemployment levels were at least half a century, more than 1 in 4 borrowers were overdue or default. One poll found that 58% of registered voters supported student loan forgiveness, and more than 820,000 people signed a petition to Change.org entitled “Donald Trump / Joe Biden: Deleting Student Loans!”
Legal arguments over whether or not the president can reduce debt are becoming more complicated.
CNBC asked Toby Merrill, founder and director of the Predatory Student Loan Project at Harvard Law School, how he would explain to a 15-year-old why he thought it was the president’s responsibility to do so.
“The constitution gives Congress the power to control government property, such as debts owed to it,” she wrote.
And Congress, Meryl said, gave the education minister, who works for the president, “the specific and unlimited power to create and cancel or change debt due to federal student loan programs.”
The same question was asked to Dr. Luke Herin. a candidate at Yale Law School who first put forward the argument in 2017 that the U.S. Department of Education could cancel student debt.
“Basically, it’s like the authority that the prosecutor has to decide whether to charge someone – the prosecutor may think a person has committed a crime, but decide not to prosecute him for any reason,” he said. Herin.
In other words, the president can work with the US Department of Education to stop collecting student loans, say supporters of the argument.
Others are not convinced that bypassing Congress to cancel the debt would be successful.
“Using an executive order to forgive federal student loans is likely to be subject to litigation and a preliminary order and will eventually fail,” Cantrowitz said.
“Also, attempting this route immediately after taking office would block any attempt to work with Congress in a bipartisan way,” he added.
Ryan D. Dorfler, a law professor at the University of Chicago, can also see that such a move has been met with countless challenges. For example, he said, opponents may say that the US Department of Education can only provide relief to borrowers in specific circumstances.
However, these potential obstacles should not prevent the president from trying it, Doerfler said.
“Congress seems completely uninterested in taking such steps,” he said, “it’s better to seek debt cancellation through enforcement than to ask Mitch McConnell to change his mind.”
Beyond the legal quarrel, other critics of the student debt anniversary say it will not significantly boost the economy, as college graduates tend to earn higher incomes, which are likely to shift their monthly bill to savings instead of spending more.
Borrowers need help now more than ever, she said.
“People affected by the coronavirus, people whose incomes have been cut or are part-time workers, are struggling under the burden of student loan debt,” Meryl said.
The US Department of Education has offered people the opportunity to suspend breaks on student loan payments until January. Almost all borrowers have taken 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 said it would be difficult for them to resume payments next month.
Despite its benefits, some say extensive forgiveness would provoke a backlash among those who have not attended college, taken out loans, or paid off their student debt. These borrowers “may feel that their frugality has been punished,” wrote Noah Smith, a Bloomberg columnist, this month.
Herin frowned at this argument.
“It’s like saying that giving a COVID vaccine is unfair to those who caught COVID before the vaccine,” he said.