Loan forgiveness: Biden says $50K is too much, signals next steps

Speaking at a town hall meeting on Tuesday, President Joe Biden said he does not intend to cancel up to $50,000 in federal student debt for individual borrowers, a threshold urged by some legislators and advocacy groups. “I’m prepared to write off a $10,000 debt,” he said, echoing the amount mentioned recently by his presidential transition team.

Biden also suggested that more aggressive debt cancellation could divert funds from competing priorities, such as early education and Biden’s proposals to make community college free for all, eliminate tuition at four-year schools for certain families, and boost funding for historically Black colleges and universities. Writing on Twitter, Rep. Alexandria Ocasio-Cortez (D-N.Y.) challenged the assertion. “Nowhere does it say we must trade-off early childhood education for student loan forgiveness,” she wrote. “We can have both.”

Biden’s preference to cap loan forgiveness at $10,000—an amount that would eliminate the debts of more than one-third of the nation’s 45 million student loan borrowers—is at odds with the widespread debt cancellation favored by many Congressional Democrats and progressive leaders. According to POLITICO, approximately 23 million borrowers hold between $10,000 and $60,000 in federal student debt; more than 7 million have balances exceeding $60,000. 

Executive action or legislation?

Policymakers urging greater debt relief have suggested that Biden could do so via executive order. Biden, however, has questioned whether he has the authority to unilaterally cancel debt and has stated his preference for achieving loan forgiveness via legislation. However, “such a plan would likely face a difficult path in Congress where even some moderate Democrats and nearly all Republicans have opposed sweeping forgiveness of student loans,” POLITICO writes.

Speaking at a press briefing the day after the town hall, White House Press Secretary Jen Psaki told reporters that Biden is asking the Justice Department and his domestic policy council to review the feasibility of executive action to wipe out loan debt. “There are a lot of considerations at play,” Psaki said, adding that the president has supported targeting relief—for instance, based on borrower income, debt type, and institution type. 

Advocates for greater forgiveness point to equity implications

Wednesday also brought a statement from Senate Majority Leader Chuck Schumer and Democratic Senator Elizabeth Warren, both proponents of forgiving up to $50,000 in student debt. The Senators wrote that the administration “has broad authority to immediately deliver much-needed relief to millions of Americans,” as evidenced by the actions of Presidents Obama and Trump. Student loan debt, Schumer and Warren continued, is “disproportionately weighing down Black and Brown Americans. Cancelling $50,000 in federal student loan debt will help close the racial wealth gap, benefit the 40 percent of borrowers who do not have a college degree, and help stimulate the economy. It’s time to act.”

Hundreds of civil rights, labor, and progressive groups favor debt cancelation, says Alexis Goldstein, senior policy analyst at Americans for Financial Reform. Goldstein says the organization “remain[s] confident that this is something the president can do by executive action” and “will continue to press the president for a number that better reflects the crisis and better addresses the racial equity issues.”

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