President Biden is looking at different options to forgive most, if not all, federal student loan debt, a move that would thrill some of his most loyal supporters and financially strapped students across the country, but is a departure from the campaign promises to provide limited relief.
The president shared his plans during a 90-minute White House meeting Monday with members of the Congressional Hispanic Caucus, participants in the exchange told CBS News. The measure could affect more than 43 million borrowers who have more than $1.6 trillion in federal student loan debt, the second-largest debt of Americans, after mortgages.
Earlier this month, the White House said it was extending a pandemic era.through Aug. 31, a move that has helped an estimated 41 million borrowers save $5 billion in interest payments a month, according to the Department of Education.
At the White House news conference on Monday, press secretary Jen Psaki reiterated that the administration would make a decision on canceling some student loan debt between now and the end of August or the pause would be extended further. The president has said in the past that he supports writing off up to $10,000 in student loan debt. Psaki said she had nothing to anticipate on the issue or how student loan debt cancellation would work.
Shortly after Psaki’s briefing and just down the hall in the West Wing, the subject of student loans came up in the room.an exchange that also included detailed conversation about immigration policy, environmental justice and the upcoming according to the legislators present.
When members of the Hispanic Caucus brought up student loans, the president said he asked his advisers to explore his options, a signal to lawmakers that he may be willing to go beyond what he promised during the campaign.
“They are looking at different options about what they can do. Forgive him completely. That was our request,” said one of the lawmakers present, who requested anonymity to speak candidly about the meeting.
It wasn’t immediately clear how soon the president might act, but many Democrats see the August 31 deadline, set just as early voting will begin in several states ahead of the midterm elections, as a natural point at which to do so. such decision. ad.
“As far as the president coming out and talking about student loan discharge with different groups, I think that’s a very good sign,” said Cody Hounanian, executive director of the Student Debt Crisis Center. “I think the president is beginning to recognize that student debt cancellation is very popular. It’s very popular with specific groups of voters that the president needs to win for the next election, and the fact that he’s using debt cancellation as a tool to talk to these communities, for me that’s a small change”.
Hounanian noted that the White House has said it has been examining student loan debt cancellation for some time. The ongoing public message that the administration is looking into it as it continues to extend the payment pause has been confusing to borrowers, he said.
Biden administration officials have been examining whether the president has the authority through executive action to forgive federal student loan debt since the president took office more than a year ago.
“What this whole argument boils down to is whether Biden, or any president, actually, under the law, will he be violating federal statute by forgiving board student loans differently than he has been doing with programs? existing?”. said Betsy Mayotte of the Institute of Student Loan Counselors. “There are some people who say he has that authority under the law to do it, and there are some people who say other than a small portion of the Perkins loans, he doesn’t.”
The Perkins program, which provided low-interest loans to low-income students, stopped making new loans in 2017.
Cancellation of student loan debt would also depend on whether a group or individual challenges the action. Such a move could result in a messy legal battle that leaves borrowers in limbo for some time. That’s why the White House and some student loan experts and officials have suggested lawmakers should be the ones to take action, since the legislation would not face the same legal challenges. But it is unlikely that the closely divided Congress will be able to pass a bill on this issue.
“Ultimately, it would be nullified through this approach,” student loan expert Mark Kantrowitz said of canceling student loan debt through executive action. He argued that the best path to debt forgiveness would be through the regulatory process, which he said is a slower process but “much more likely to survive legal challenges.”
During his presidential campaign, Mr. Biden said he supported writing off $10,000 in student loan debt and action by Congress. ButYou have been asked to go further and use executive action to write off $50,000 in student loan debt per borrower.
“President Obama did it, President Trump did it, and President Biden has now done it repeatedly. The power is clearly there,” Sen. Elizabeth Warren, a Democrat from Massachusetts, said on CBS’s “Face the Nation” on Sunday.
in a, the Federal Reserve Bank of New York estimated that paying off $50,0000 in student loan debt would forgive the entire balance of nearly 30 million federal student loan borrowers. The average forgiveness would be more than $23,800 per borrower. The move would cost about $904 billion. But some of that money, advocates point out, has already been out the door for decades.
Proponents of student loan debt cancellation have also argued that it is a way to build racial equity. Studies show that black borrowers often have to take out large amounts of student debt for higher education. After graduation, the average student debt carried by black borrowers is higher than the burden carried by white and brown borrowers, according to studies.
Race, in addition to providing economic relief to younger working-class Americans saddled with a debt load they may not have fully understood when they applied for the loans, are the main reasons members of the Hispanic Caucus continue to push for relief. of the loans.