U. S. Senate Majority Leader Chuck Schumer (Photo by Lev Radin/Pacific Press/LightRocket via Getty … [+]
You may get student loan cancellation, but it likely won’t happen by executive order.
Here’s what you need to know.
Student Loans
There is no shortage of claims from members of Congress that “Biden can cancel student loans” and all it takes is a “flick of a pen.” It’s almost become a meme and something that’s a foregone conclusion. It’s as if everybody is waiting for student loan cancellation, but somehow the president is holding things up for some unexplained reason. Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) have said the same, and they want Biden to cancel $50,000 of student loans by executive order. In the House, Rep. Ilhan Omar (D-MN), Rep. Alexandria Ocasio-Cortez (D-NY) and Rep. Ayanna Pressley (D-MA) have echoed similar sentiments.
So, what’s the hold up?
Student loan cancellation more complicated
For some, student loan cancellation is a no-brainer. Supporters say it will stimulate the economy, reduce disparities, help with family formation, promote home buying, and encourage retirement savings. For opponents, student loan cancellation is a large wealth redistribution program that will further increase the national debt and reward borrowers who didn’t repay their student loans. Since Democrats control Congress and the White House, one would assume that student loan forgiveness — a major policy goal — would be a foregone conclusion. After all, Biden and Democrats in Congress both want student loan cancellation. For example, Biden wants student loans cancelled immediately. Democrats want that as well. However, student loan cancellation is not that simple. There are major differences among supporters with respect to who should qualify for student loan forgiveness and how much student loan forgiveness there should be. There’s also a major difference over who will implement student loan cancellation procedurally. Biden wants Congress to cancel student loans, and he said he will sign legislation that Congress sends to his desk. So, if both Democrats and Congress and Biden want student loan cancellation, why the delay? It all comes down to strategy.
Why student loan cancellation likely won’t be through executive order
Schumer and Warren have waged, based on their own admission, a campaign of “public pressure” against Biden, a fellow Democrat. This is despite that for the most part, Biden, Schumer and Warren support the same policy goal: student loan cancellation. Yes, they differ on the amount of student loan forgiveness (Biden wants $10,000 per borrower, while Schumer and Warren want $50,000). However, they both subscribe to the notion of at least some student loan cancellation. Schumer has now admitted that Democrats are actively seeking to pressure the president to cancel student loans unilaterally without any further congressional authorization. They cite the Higher Education Act of 1965, which they say already grants the U.S. Secretary of Education unlimited authority to cancel any amount of student loan debt.
Biden has been very clear that he doesn’t agree that a president can simply cancel $650 billion of student loan debt — Warren’s estimated cost of forgiving up to $50,000 per student loan borrower — through executive order. Even if a president had that authority, Biden said he would be unlikely to do it. “I think that’s pretty questionable,” Biden said in December, when referring to whether a president has unilateral authority to simply cancel student loans on a wide-scale basis. “I’m unsure of that. I’d be unlikely to do that.” Biden’s press secretary, Jen Psaki, said Biden “already took a step through an executive action on the first day [as president], and he would look to Congress to take the next steps.” That said, while Biden prefers Congress to act, Biden is considering options to cancel student loan debt through executive action.
Importantly, it’s not a question of whether Biden wants to use executive power. Legally, he may not be able to. That’s his administration’s current position. Schumer and Warren, who are both attorneys, disagree. Therefore, student loan cancellation may very well be decided by the courts, as Republicans in Congress and other opponent stakeholders likely would sue if the president sought to cancel student loans by executive order. Given this fact pattern — the respective positions of Congress and Biden as well as the questionable legal authority — it’s unclear why Democrats have sought “public pressure” as their primary strategy. Public advocacy is common in Washington and influence policy outcomes. Here, however, Biden already shares the same policy goals. There’s no need to convince the president about the merits of student loan cancellation. Rather, the Democrats’ strategy can be reduced to arguing over procedure. There are substantive questions over the amount of cancellation, but the larger argument is whether the president can unilaterally forgive student loans en masse.
Will you get student loan cancellation?
If you’re wondering whether you will get student loan cancellation, there are two outcomes: either Biden cancels student loans through executive action, or Congress cancels student loans through the legislative process. The second outcome is the default approach and something Congress could address tomorrow. Strikingly, Congress has refused to pass legislation on student loan cancellation. When asked whether Congress would pass legislation to forgive student loans, Schumer ignored the question and said earlier this month, “The easiest way to do it is for President Biden to do it with the flick of a pen.” That’s bad news for student loan cancellation. The U.S. Senate Majority Leader should be able to answer a question whether Congress intends to bring student loan cancellation for a vote. “Pressuring the president” to do something it’s unclear he can do legally — even if he wanted to — does not bode well for the prospect of cancelling student loans for tens of millions of student loan borrowers.
It’s increasingly clear that Senate Democrats aren’t confident that Congress can pass legislation for student loan forgiveness. That suggests that Democrats in Congress — primarily moderate Democrats — aren’t fully supportive of student loan cancellation. While it’s possible Biden cancels student loans through executive action, there’s no indication that he will now or in the future. So, if the game plan is to rely on cancellation by executive action and not pass any legislation, supporters of student loan forgiveness may be facing big disappointment. Make sure you have a student loans game plan because there’s no guarantee Congress will cancel your student loans, or how much student loan forgiveness there will be. Start with these three options instead, all of which have no fees:
