Don’t expect student loan forgiveness just because President Joe Biden has the legal ability to forgive student loans.
Here’s what you need to know.
After Biden extended student loan relief last week, there has been speculation among progressive Democrats that Biden’s next presidential act will be large-scale student loan forgiveness. Whether it’s $50,000, $10,000 or some other amount, progressives say Biden can use the same legal authority he used to extend student loan relief through Jan. 31. 2022, including temporary student loan forbearance, to enact student loan forgiveness. Once the U.S. Department of Education delivers its legal analysis and recommendation on student loan forgiveness to the president, progressives hope Biden will be ready to act. For example, if the Department of Education believes that Biden has the legal authority to cancel student loan debt, does Biden simply enact full-scale student loan cancellation? This raises an important question: is it really that simple? Let’s explore.
Cancellation of student loan: the legal authority of the president
There is no shortage of rhetoric from non-lawyers and lawyers making bold claims such as:
- “Biden can cancel student loans.”
- “He already has the legal authority.”
- “All it takes is a ‘flick of the pen’.
Some people simply repeat phrases spoken by friends or on social media, while others replicate phrases shared by student loan advocates in Congress, such as Sen. Elizabeth Warren (D-MA) and the Chief of the Senate Majority Chuck Schumer (D-NY). The primary argument, of several, for why the president can forgive student loan debt goes like this: Higher Education 1965 grants the U.S. Secretary of Education (whom the president appoints and the Senate confirms) power to cancel student loan debt. Specifically, Section 432A of the Higher Education Act 1965 states that the Department of Education has the power “to vary, impair, waive or release any right, title, claim, lien or demand, whatever acquired, including any equity or right of redemption.” Based on this text, some proponents of large-scale student loan forgiveness claim that Congress has already granted the president the power to forgive student loans.
Opponents of this argument say the president lacks the existing legal authority to enact large-scale student loan forgiveness. Why? They say Congress can authorize Biden to forgive student loans, but no such authorization exists — either in the Higher Education Act of 1965 or elsewhere. House Speaker Count Nancy Pelosi (D-CA) in this camp. They say the text is vague and does not explicitly state that the President (or the US Secretary of Education) has the authority to forgive student loan debt. Opponents say that based on a reading adopted by progressives, one would have to believe that Congress granted the president an absolute right to cancel any student loan debt of any amount for every student loan borrower to life (which is an unlikely scenario). Finally, opponents cite the separation of powers clause of the US Constitution, which states that only the legislature (Congress) has the power to authorize spending and cancel debt.
Student Loan Cancellation: It’s Not Necessarily About Biden’s Legal Capacity
Whether you support or oppose large-scale student loan cancellation, the conversation about student loan cancellation has shifted to Biden’s unilateral legal authority to cancel student loan debt without Congress. It has almost become binary: if the Department of Education declares that Biden has legal authority, he will forgive student loan debt. If the Department of Education says Biden has no legal authority, Biden will not forgive student loan debt. However, it is more complex than this construction. First, the Department of Education provides legal analysis and legal advice to the president. A legal opinion is not binding and is not considered law. The Trump administration, for example, found that the president lacked the unilateral authority to enact large-scale student loan forgiveness. Biden’s education department could affirm the same conclusion or draw a different one. Ultimately, however, Biden will make the final decision — and Biden may or may not agree with the Department of Education’s findings.
Second, Biden has repeatedly stated that he does not believe he has the unilateral executive power to enact large-scale student loan forgiveness. He made that statement as president, but he also speaks as a lawyer, vice president, and longtime U.S. senator on the Senate Judiciary Committee. Biden’s claims are likely supported by legal counsel who reviewed the relevant law and concluded the same. It is therefore unlikely that Biden’s education department would suddenly come to an alternative conclusion and recommend that Biden now have the legal authority to enact large-scale student loan forgiveness. It’s been nearly six months since the Department of Education began this legal analysis, and it’s possible they’ll change course so that Biden has political cover to write off student debt. However, Biden has been consistent: He supports $10,000 in student loan forgiveness and he wants Congress to cancel student debt. However, while canceling student loans would help student borrowers, that doesn’t mean Biden will cancel everyone’s student loans.
What Student Loan Forgiveness Will Really Be Based On
It’s possible the Department of Education will determine that Biden has the power to forgive student loan debt. After all, this is a non-binding legal note. If this happens, it does not mean your student loans will be forgiven. There will likely be legal challenges, including in the U.S. Supreme Court, that could delay the implementation of any student loan forgiveness. Here’s the reality: Next steps for student loan forgiveness won’t necessarily be based on Biden’s legal authority, or lack thereof. The legal question will be important, but there are also other political and political considerations, for example.
Politically, both parties want to fix higher education. The main policy challenge is that student loan forgiveness is an issue driven by progressive Democrats. Most moderate Democrats and conservative Democrats do not support large-scale student loan cancellation. Republicans don’t support it either. This is why Congress cannot approve the cancellation of a student loan of any amount. Canceling student loans is not a popular political position in Congress, despite the headlines in the media. Then about 80% of the adult population in the United States does not have a student loan or did not go to college. While student borrowers would welcome student debt cancellation, there are political risks to the congressional midterm elections and the president’s re-election efforts if he proceeds with student debt cancellation. On the contrary, not canceling student loans also has political implications among progressive Democratic voters.
The larger question regarding student loan forgiveness is: Will all of Biden’s past and future actions on student loans be enough to outweigh the need for further student loan forgiveness? Simply put, Biden has taken aggressive steps to improve student borrower outcomes. For example:
Some of them are political achievements and some are political prescriptions. The Department of Education held hearings and accepted public input to improve student loans for all borrowers. Since March 2020, under the Trump and Biden administrations, student borrowers will also get over $110 billion in student loan forgiveness by January 2022. For some observers, the amount of student loan forgiveness is enough ( or some think it is excessive). Coupled with this long list of student loan changes, the rationale for large-scale student loan forgiveness may dim. Why? Biden has signed into law targeted student loan forgiveness under existing law and will continue to do so. He also pledged to change student loans so that student borrowers are better treated. Will all these actions be enough if student loans are not canceled?
The flip side of this argument is that $110 billion in student loan forgiveness — or $5 billion a month since the start of the Covid-19 pandemic — is a relatively small amount of the $1.7 trillion. outstanding student loan debt dollars. If Biden canceled up to $50,000 in student loan debt (the Warren-Schumer plan), the total cost could be $1 trillion and pay off the student loans of 36 million federal borrowers. Expect increased lobbying from members of Congress who expect Biden to cancel student loans by Jan. 31, 2022. Student loan relief for another four months is welcome, but progressives and Other student loan advocates won’t stop until many more student loans are forgiven. What ultimately happens next won’t be based solely on Biden’s legal authority. There will also be political considerations underlying any action on student loans.
Given the uncertainty surrounding large-scale student loan forgiveness, make sure you have a game plan for your student loans. That means taking control of your student loans today and not waiting until February 2022. Here are some popular options to help you save money: