President Joe Biden discusses student loans (Photo by Scott Eisen/Getty Images)
President Joe Biden will ask the U.S. Department of Justice to review his authority to cancel student loans.
Here’s what you need to know.
Student Loans
As first reported by Reuters, Biden will ask the Justice Department whether he has existing, unilateral power to cancel student loan debt. If the Justice Department says he doesn’t have authority to cancel student loan debt by executive action (the more likely scenario), Biden would have independent confirmation of his existing position. If the Justice Department finds that he has existing authority (the less likely scenario), Biden could cancel student loan debt through executive action. According to White House Press Secretary Jen Psaki:
- Biden supports $10,000 of student loan cancellation.
- Biden doesn’t support $50,000 of student loan cancellation for every student loan borrower.
- Biden believes that any student loan cancellation above $10,000 should be based on income and the type of student loan debt.
- Biden will ask the Justice Department to “conduct a legal review of his authority to act by executive action.”
- The review will be done together with the White House Domestic Policy Council.
- The Domestic Policy Council will review how any student loan cancellation would be targeted.
Biden has said that he would consider student loan forgiveness through executive order. However, he has said repeatedly that he doesn’t believe he has legal authority to cancel student loan debt of any amount on a wide-scale basis. While the Justice Department can review Biden’s authority, if any, one can assume Biden’s legal advisors likely have conducted a similar review and concluded Biden doesn’t have such authority. If there is any student loan cancellation, Democrats in Congress want to limit student loan cancellation to borrowers who earn less than $125,000 per year. The Trump administration wrote a non-binding memo that the president doesn’t have unilateral authority for wide-scale student loan cancellation.
Democrats plan to cancel $50,000 of student loans by executive order
In Congress, Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) are adamant that Biden has existing, unilateral authority to cancel student loans. They say he doesn’t need any further congressional authorization, and he could sign an executive order today. What’s their proof? According to Schumer and Warren, the Higher Education of 1965 grants the authority to the U.S. Secretary of Education to cancel an unlimited amount of student loan debt. They reference Section 432(a) of the Higher Education Act, which grants the U.S. Secretary of Education the authority “to modify, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.” Democrats plans to cancel $50,000 of student loans by executive order. They have waged a public campaign against Biden, hoping to somehow pressure him to cave in and cancel student loan debt. Rep. Alexandria Ocasio-Cortez (D-NY) and other progressive Democrats have joined in the fight as well. If their public fight fails, Democrats in Congress haven’t articulated a clear plan to pass student loan cancellation in Congress. As of now, it’s unclear whether Schumer and Warren can craft a bipartisan plan.
How to pay off student loans faster
If you want to pay off student loans faster, make sure you have a student loans game plan. This includes understanding all your options to get a lower interest rate, get a lower monthly payment, and think about your student loan repayment plan. You can start with these three options, all of which have no fees:
