At the moment, it is an open question whether President-elect Joe Biden is interested in testing his power as President in an attempt to cancel student debts.
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This is an urgent question, and not just for academic and legal scholars. Dozens of millions of Americans have much to do with the answer: Can the President cancel student debt without Congress?
If the president were able to cancel student debt without passing any laws, borrowers could theoretically reduce or eliminate their balances overnight. On the other hand, the likelihood that Congress will agree to grant the loans is uncertain at best. In general, Republicans are not in favor of debt relief.
At the moment it is also an open question whether President-elect Joe Biden is interested in testing his power as President in this way.
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During the 2020 Democratic Presidential Primary, Massachusetts Senator Elizabeth Warren made vows in the first few days of her term, including her announcement, that she would provide student loans an analysis written by three legal experts who worked on the predatory lending project at Harvard Law School and described such a move as “lawful and permissible”.
Biden didn’t go that far, however.
A spokesman for the president-elect would not say whether Biden has taken a stance on whether or not he can cancel student debt without Congress. through he pointed out remarks Biden had made at a recent press conference after being asked if he would take executive action to cancel the loans.
“You are in real trouble,” Biden said of student loan borrowers. “You have to make a choice between paying your student loan or paying your rent. These types of decisions should be made immediately.”
Biden announced that he would cancel all borrowers’ debts of $ 10,000 for students and the rest of the debt for those who attended public colleges or historically black colleges and universities and earn less than $ 125,000 a year. Overall, according to calculations by university expert Mark Kantrowitz, this would reduce the number of outstanding student loans of $ 1.7 trillion by about a third.
Senator Chuck Schumer, D-N.Y. And Warren called in September for the next president to grant $ 50,000 in student loans to each borrower as soon as they entered the White House. In an interview with The.Ink earlier this month, Schumer said Biden could cancel the debt. “with the pen contrary to the legislation. “
More than 230 organizations and nonprofitsA letter was signed on November 18 by Americans for Financial Reform, the NAACP and the National Consumer Law Center, among others, asking Biden to cancel student loans on his first day as president.
“To minimize the harm to the next generation and to narrow the racial and gender gap, bold and immediate action is needed to protect student loan borrowers,” the groups wrote.
The student loan crisis was particularly painful for black borrowers: nearly 85% of black college graduates carry educational debt, compared to 69% of white college graduates. And because of racial wealth and income differences in the USBlack borrowers suffer from higher default rates and are also in debt for much longer than their white counterparts. Two-thirds of the country’s outstanding student loan debt is now borne by women.
Even before the pandemic, when the country was in the midst of its longest economic expansion in history, with unemployment at half a century lows, more than one in four student loan borrowers was either defaulting or defaulting. A survey found that 58% of registered voters support student loan forgiveness and more 820,000 People have a Change.org petition called “Donald Trump / Joe Biden: Delete Student Loans!”
The legal arguments about whether or not a president cannot pay the debt quickly get complicated.
CNBC asked Toby Merrill, Founder and Director of the Predatory Lending Project at Harvard Law School, how she would explain to a 15-year-old why she believes it is in the power of the President.
“The Constitution gave Congress the power to control government property and debt owed to it,” she wrote.
And Congress, Merrill said, gave the education secretary who works for the president “specific and unrestricted authority to create and cancel or modify debts owed under federal student loan programs.”
“Basically, it’s like the power a prosecutor must have in deciding whether to bring charges against someone – the prosecutor might think a person has committed a crime but decide not to bring them to trial for whatever reason to initiate, “said Mistress.
In other words, the president could work with the U.S. Department of Education to stop student loan collection, proponents of the argument say.
Others are not confident that bypassing Congress to reduce the debt would be successful.
“The use of an executive regulation to grant federal student loans is likely to be punished with a lawsuit and an injunction and will eventually fail,” said Kantrowitz.
“Also, attempting this route immediately after taking office would block any attempt to work bipartisan with Congress,” he added.
Ryan D. Doerfler, a law professor at the University of Chicago, can also see that such a move is overcome by a multitude of challenges. For example, opponents might say that the US Department of Education can only provide relief to borrowers under certain circumstances.
However, these potential obstacles shouldn’t prevent the president from trying, Doerfler said.
“Congress seems completely uninterested in taking such steps,” he said.
Beyond the litigation, other critics of a college anniversary say it won’t boost the economy much because college graduates are typically higher earners who would be more likely to redirect their monthly bills towards savings rather than higher expenses.
Borrowers need help now more than ever, she said.
“People affected by the coronavirus, whose income has been cut, or who are hourly workers are struggling under the burden of student loan debt,” Merrill said.
The U.S. Department of Education offered people the option to suspend their student loan payments until January. Almost all borrowers have taken it: Less than 11% of those with federal student loans pay their bills during the pandemic, according to the data analyzed by Kantrowitz. In a recent Pew poll 58% borrowers report that it would be difficult for them to resume payments in the coming month.
Despite its benefits, some say that comprehensive forgiveness would create a backlash among those who haven’t attended college, taken out loans, or already paid off their student debts. These borrowers “may feel that their frugality is being punished,” Bloomberg columnist Noah Smith, wrote this month.
Mistress resisted this argument.
“It’s like saying that providing a COVID vaccine is unfair to those who caught COVID before the vaccine,” he said.