Schumer asks Biden to write off $ 50,000 in student debt per borrower
U.S. Senate Democratic Leader Chuck Schumer (D-NY) answers questions during a press conference on Capitol Hill in Washington, December 1, 2020.
Kevin Lamarque | Reuters
Minority Leader Senator Chuck Schumer continues to put pressure President-elect Joe Biden to write off up to $ 50,000 in student debt per borrower on the first day of his presidency.
“We have come to the conclusion that President Biden can cancel this debt, can cancel $ 50,000 in debt on the first day he becomes president,” Schumer said Monday outside his office in Midtown Manhattan. “You don’t need Congress; all you need is a stroke of the pen.”
More than 40 million Americans have a lot to say about whether or not a president can cancel student debt without Congress. Borrowers could see their debts reduced or eliminated overnight if the president could act without legislation. In contrast, Congress is unlikely to agree to cancel the loans, if ever.
For now, it’s also an open question whether Biden has any interest in testing his presidential power in this way.
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In the 2020 Democratic presidential primary, Massachusetts Senator Elizabeth Warren pledged to forgive student loans in the early days of his administration, including with its announcement analysis written by three legal experts, based at Harvard Law School’s Project on Predatory Student Lending, who called such a decision “lawful and authorized”.
Biden, however, didn’t go that far.
A spokesperson for the president-elect wouldn’t say whether Biden has taken a position on whether or not to cancel student debt without Congress, through he highlighted remarks made by Biden at a recent press conference after being asked if he would take executive action to cancel the loans.
“They have real problems,” Biden said of student loan borrowers. “They have to make choices between paying off their student loan and paying rent, those kinds of decisions. It should be done immediately.”
Biden said he would write off $ 10,000 in student debt for all borrowers, and the rest of the debt for those who attended public colleges or historically black colleges and universities and earn less than $ 125,000 a year. In total, that would reduce the country’s outstanding student loan stock by $ 1.7 trillion by around a third, according to higher education expert Mark Kantrowitz’s calculations.
Biden is on the rise pressure to go further but in the midst of the pandemic.
Over 230 organizations and non-profit organizations, including Americans for Financial Reform, the NAACP, and the National Consumer Law Center, signed a letter on Nov. 18, calling on Biden to cancel student loans on his first day as president.
An investigation revealed that 58% of registered voters are in favor of canceling the student loan and about 840,000 people signed a Change.org petition titled “Donald Trump / Joe Biden: Erase Student Loans!”
The legal arguments over whether or not a president can reduce debt quickly become complicated.
CNBC asked Toby Merrill, founder and director of Project on Predatory Student Lending at Harvard Law School, how she would explain to a 15-year-old why she thinks it is in the president’s power to do so.
“The Constitution gave Congress the power to control government property, such as debts owed to it,” she wrote.
And Congress, Merrill said, has granted the secretary of education, who works for the president, “specific and unlimited power to create and write off or modify debts owed under federal loan programs. students “.
“Basically it’s like the power a prosecutor has to determine whether to lay charges against someone – the prosecutor may think that a person has committed a crime but decide not to press charges against them for whatever reason, “Herrine said.
In other words: the president could work with the US Department of Education to stop collecting student loans from people, supporters of the argument say.
Others are not so confident.
“The use of an executive order to forgive federal student loans will likely be the subject of a trial and a preliminary injunction, and ultimately fail,” Kantrowitz said.
“Also, trying this route immediately after taking office would block any attempt to work with Congress in a bipartisan fashion,” he added.
Ryan d doerfler, a law professor at the University of Chicago, may also see such a decision encountering a myriad of challenges. For example, he said, opponents may say that the US Department of Education can only provide aid to borrowers in specific circumstances.
Still, those potential hurdles shouldn’t stop the president from trying it, Doerfler said.
“Congress does not seem at all interested in taking such steps,” he said, and therefore “it is better to pursue debt cancellation through executive action than to pray that Mitch McConnell change of opinion”.
Beyond the legal fight, other critics of a student debt jubilee say it would not significantly boost the economy because college graduates tend to be higher earners who would likely shift their monthly bill toward savings rather than spending more.
Merrill disagrees, pointing out that student loan borrowers were struggling even before the pandemic.
Indeed, when the country was in the midst of its longest economic expansion in history and unemployment levels were at their lowest for half a century, more than one in four student loan borrowers were in default or in default. default. Research has shown that loans make it harder for Americans to buy houses and cars, start companies and families, save or invest. Country’s outstanding student loan balance set to reach $ 2 trillion by 2022, experts say much of it will probably never be refunded. All this before the pandemic.
“People affected by the coronavirus, people whose incomes have been cut or who work on time, are struggling under the burden of student loan debt,” Merrill said.
The US Department of Education has offered people the option of putting their student loan payments on hold until February 2021. Almost all borrowers have taken it: Less than 11% of people on federal student loans are paying their bills during the pandemic, according to data analyzed by Kantrowitz. In a recent Pew poll, 58% of borrowers say it will be difficult for them to resume their payments in the coming month.
Despite its benefits, some say that canceling the student loan would cause a backlash for those who haven’t attended college, haven’t taken out loans, or have already paid off student debt. These borrowers “might feel their frugality was being punished,” Bloomberg columnist Noah Smith, wrote recently.
At this argument, Herrine bristled.
“It’s like saying that providing a Covid vaccine is unfair to those who caught Covid before the vaccine,” he said.
Would you be in favor of President-elect Biden forgiving borrowers of $ 50,000 in student debt? Why or why not? Write to me at [email protected]