Can student loan debt be canceled by presidential decree?


Can President Joe Biden cancel student loan debt with an executive order? Senate Majority Leader Chuck Schumer, DN.Y., has told several press conferences that Biden can write off such debt with a “stroke of the pen.”

Canceling student debt of up to $ 50,000 has been a rallying cry for many young Democrats, who see their ability to borrow for homes or cars negatively affected by heavy student debt. In January 2021, student debt held by 44.7 million Americans totaled $ 1.73 trillion, according to Federal Reserve data.

As a presidential candidate in 2020, Biden pledged to “forgive all federal undergraduate student tuition-related debts at two- and four-year public and private colleges and universities (historically black colleges and universities). ) and (institutions serving minorities) for debt. incumbents earning up to $ 125,000.

Biden’s approach was not as aggressive as many activists and some Democratic officials had hoped, and Biden did not include funding to forgive student loans when he released his presidential budget proposal for it. ‘fiscal year 2022 in May 2021.

Critics of student debt cancellation, especially the more aggressive measures, argue that it would unfairly treat Americans who scrimp on their student loans.

The White House said Biden was continuing to study the matter. He owns request Education Secretary Miguel Cardona will prepare a note on his legal authority to write off student loan debt, and Biden also said he would like Congress to take action.

That said, Biden has set some limits. In a town hall in February, he mentionned he’s “ready to write off the debt of $ 10,000, but not ($ 50,000), because I don’t think I have the authority to do it.”

Senate Majority Leader Chuck Schumer, DN.Y., speaks with reporters on June 8, 2021. (AP)

Still, Schumer and his allies are keeping the pressure on.

On June 9, Schumer joined forces with Senator Elizabeth Warren, D-Mass., Actor and activist Alyssa Milano, and the NAACP in a #CancelStudentDebt Voices event organized by the Student Debt Crisis group.

In one Tweeter he sent that day, Schumer reiterated his request on the ease with which debt relief could be accomplished. “President Biden can #CancelStudentDebt with the stroke of a pen, ”Schumer tweeted.

Is Schumer correct that Biden can write off student loan debt? Because this is the subject of legal debate and ultimately court decisions, we will not be evaluating it on our Truth-O-Meter. However, we have found that the problem is not as clear as Schumer suggests.

The law on higher education

The key provision that supporters of the annulment cite comes from the Higher Education Act, which was originally signed in 1965 and has since been updated.

Specifically, the law grants a presidential administration, through the Secretary of Education, the power to “enforce, pay, compromise, waive or release” federal student loans held by the government. Indeed, the Higher Education Act authorized President Donald Trump and Biden to suspend student loan debt payments during the coronavirus pandemic.

However, experts disagree on whether the president can allow blanket debt cancellation through executive order. There are enough legal issues that any ruling by the president would likely lead to litigation, experts said.

“There are cases of presidential decrees being rejected by the courts for taking action that was not permitted by law in the past,” said Jason MacDonald, a political scientist at the University of West Virginia.

The Trump administration saw this kind of judicial setback with its initial travel ban for people from majority Muslim countries, MacDonald said.

While modest efforts to reduce student debt may not create legal hurdles, “the more ambitious this authority is used, the greater the possibility of a legal challenge,” said Judith Scott-Clayton, professor. of Economics and Education at Columbia University.

One of the contested issues could be the changes made by Congress to the Higher Education Act, which cited tight conditions under which student debt can be canceled. Previous federal legislation has dealt with debt relief for teachers and public sector workers, cases of school closures before a student graduates, and cases of the death or disability of a student. student. It is not so clear whether the general pardon would pass the legal course, experts said.

Likewise, the power of the Higher Education Act to “compromise, give up or release” has generally been used in the past for loans only in unusual circumstances, on a case-by-case basis, and for loans which should not be used. not be reimbursed. Despite the heavily indebted loans of many recent graduates, it is not clear that all of their loans would be deemed non-repayable.

“The ‘compromise’ is typically used when someone cannot pay a debt to the government, then the government makes a deal,” said Adam Looney, senior researcher at the Brookings Institution. “It’s very different from mass cancellation.”

Meanwhile, another statute, the Federal Claims Collection Act, gives federal agencies the power to collect or impair claims and to suspend or terminate collection actions.

However, this law “sets a high standard when the government can compromise a debt, in limited circumstances such as when the debtor is unable to pay and the incapacity is verified, or when the cost of collecting the debt would be too high to pay. justify the collection. ”Looney said.

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