Democrats introduce resolution to write off student loan debt

Democratic lawmakers on Thursday introduced a resolution calling on President Joe Biden to write off $ 50,000 in student loan debt for everyone with such debt through executive action.

Senate Majority Leader Chuck Schumer of New York held a press conference Thursday morning to announce the initiative alongside Democratic Senator Elizabeth Warren of Massachusetts and Representatives Mondaire Jones of New York, Ayanna Pressley of Massachusetts , Ilhan Omar of Minnesota and Alma Adams of North Carolina.

Lawmakers have linked issues of racial inequality and student debt.

“It is also a question of civil rights. A disproportionate burden of student debt often hangs over people of color because they have been exploited by so many of these ugly, vile, filthy… for-profit colleges, ” Schumer said at the conference.

Warren added, “Canceling student loan debt is the most effective executive step President Biden can take to close the racial wealth gap.”

“The student debt crisis has always been about racial and economic justice,” Pressley said. “But for too long, the narrative has excluded black and Latin communities and the ways in which that debt has exacerbated deep-rooted racial and economic inequalities in our country.”

A 2019 report of the Institute on heritage and social policy found that the median white borrowers had reduced their debt by 94% 20 years after starting repayment compared to the median black borrower who still owed 95% of their student loans after the same period.

Americans owed more than $ 1.7 trillion in student loan debt in the third quarter of 2020 – an increase of about 4% from the third quarter of 2019, according to the Federal Reserve.

The cancellation of $ 50,000 in student debt would be reduce the country’s debt balance from $ 1.7 trillion to $ 700 billion, CNBC reported. That would mean that 80% of federal student loan borrowers, representing 36 million people, would be completely free of federal debt, higher education expert Mark Kantrowitz told the publication.

Questions remain about the power to cancel debt

Biden has previously expressed skepticism about the president’s power to write off student loan debt through executive action.

“It’s different from what I said, and I’m going to be in trouble for saying that. . . for example, one can argue that the president may have the executive power to cancel up to $ 50,000 in student debt ”, Biden told the Washington Post. “Well, I think that’s pretty questionable. I’m not sure of it. I probably wouldn’t do that.

Biden officials said the president still supports $ 10,000 student loan debt cancellation per borrower, CNBC reported.

Schumer and Warren claimed that Biden has the power to write off debt through the “”existing authority under the Higher Education Act. “

Some experts have expressed similar doubts about such executive actions, saying congressional bypassing could lead to legal challenges.

“Using an executive order to forgive federal student loans will likely meet with legal action and a preliminary injunction, and ultimately fail.” Kantrowitz told CNBC. “Further, trying this route immediately after taking office would block any attempt to work with Congress in a bipartisan fashion. “

Ryan Brown Financial Planner of CR Myers & Associates told Forbes that legal scholars believed federal debt debt fell within the business, fiscal or fiscal powers of Congress and “that an executive order issued by the president would therefore be an undue interference with the government. constitutional authority “.

Officials in the Education Department under the administration of former President Donald Trump released a note in January claiming that the agency does not have the power to write off student loan debt either.

The note states that “the secretary does not have statutory authority to cancel, compromise, release or blanket or mass cancel student loan principal balances, and / or materially alter repayment amounts or amounts. conditions of these, whether due to COVID-. 19 pandemic or for any other reason.

Former Education Secretary Betsy DeVos called the proposals to write off federal student loan debt “crazy”.

“Their proposals are crazy”, DeVos told Fox News in 2019. “. It will be two of the three Americans who will not go to college by paying one in three who will.

This story was originally published February 4, 2021 12:13 pm.