Senators press Biden on $50K debt forgiveness, but he says no

Warren and Schumer say it is "time to act" but the President is not comfortable with the amount, continuing to lean toward the $10,000 figure.
By: | February 17, 2021
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Senator Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) on Wednesday doubled down on the need to cancel portions of student debt, pressuring the Biden administration to act quickly to help overwhelmed loan borrowers.

“The Biden administration has said it is reviewing options for canceling up to $50,000 in student debt by executive action, and we are confident they will agree with the standards Presidents Obama and Trump used,” the Senators wrote in a statement.

However, Biden said during a Town Hall event on CNN in Milwaukee on Tuesday that he “will not make that happen.” He said he didn’t have the authority to approve that amount and said he was not willing to entertain the idea of having the government forgive debt for those who went to “Harvard and Yale and Penn.” He would, however, be agreeable to the cancellation of $10,000, provided it gets approval from Congress.

On Wednesday, Warren and Schumer contradicted Biden, professing that “legal experts have concluded the administration has the broad authority [to cancel debt].” Along with Congresswoman Ayanna Pressley (D-MA), they have pressed Biden to use powers under the Higher Education Act to lower payments and  prevent borrowers from facing further tax liability.

With bicameral support from a number of Democrats in Congress, they said in introduction legislation two weeks ago that new Secretary of Education Miguel Cardona has the legal right to end student debt under Section 432(a) of the Higher Education Act. They said the Secretary can “modify, ‘compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.’ ”

The crisis and some solutions

Senators say help is crucial now to offset a student debt total that has surpassed $1.6 trillion, according to the Center for American Progress. The Biden administration noted in January, in fact, that “20% of borrowers were behind on payments.” Much of that debt, the senators say, is adversely affecting minority and underserved populations.

“An ocean of student loan debt is holding back 43 million borrowers and disproportionately weighing down Black and Brown Americans,” Warren and Schumer said. “Canceling $50,000 in federal student loan debt will help close the racial wealth gap, benefit the 40% of borrowers who do not have a college degree, and help stimulate the economy. It’s time to act. We will keep fighting.”

Congressional leaders aren’t the only ones calling for a massive cancellation of debt. More than 325 organizations, including civil rights groups, consumer rights advocates, teachers associations and health, labor and climate groups also have supported the cause.

Biden is not against helping those who have student loan payments, just not that amount.

In January during a slew of executive orders, he extended the grace period of student loan borrowers to the end of September. He also paused the interest at 0% for their payments. Those came just in time for borrowers whose loan payments, which had been on hold since the start of the pandemic, were about to come due.

He and Vice President Kamala Harris also floated other ideas during their campaign run, including:

  • Two-year, tuition-free community college to those who choose it and forging a grant program to assist institutions who “implement evidence-based practices and innovative solutions.”
  • Offering free tuition to public institutions for families earning less than $125,000.
  • Doubling the amount of Pell grants, citing the rising costs of tuition as barriers to prospective students, which he said covers only about 30% of tuition.
  • Giving public servants up to $10,000 per year of the service on student loan payments for up to five years.
  • Launching a “Title I for Postsecondary Education” through a grant that would offer emergency support for those who are in financial peril so they can continue to stay in school and earn their degrees.
  • Investing $10 billion and tripling aid through Title III and Title V of the Higher Education Act for Historically Black Colleges and Universities and minority-serving institutions.

But the Congressmen and women supporting Schumer and Warren, say big help is necessary immediately.

“The student loan debt crisis was a financial bomb ready to go off well before the COVID-19 pandemic – and after thousands lost their jobs in the economic downturn, the fuse has been lit,” said Sen. Richard Blumenthal (D-CT). “Rising costs and predatory lenders have forced young people to mortgage their futures for a chance at a college education. We’re urging the Biden Administration to take bold action right now and ease the burden for student borrowers.”