How Biden could approach student loan cancellation in 2022
THROUGH Sydney LakeJanuary 11, 2022, 2:01 PM
President Joe Biden leaves the White House State Dining Room after speaking about the December 2021 Jobs Report in January 2022.
Oliver Contreras — Sipa / Bloomberg / Getty Images
In 2021, the Biden administration announced more than $ 11 billion in student loan cancellations. While that may seem like a hefty amount, the 2021 cancellations accounted for only about 1% of the federal student loan debt outstanding, which today stands at nearly $ 1.8 trillion. Hundreds of thousands of borrowers will benefit from these forgiveness rounds, but more than 43 million people are still in debt when it comes to federal student loans.
“It’s hard to conceptualize, but it’s really a tiny, tiny, tiny fraction of what the government spends on other issues,” Cody Hounanian, executive director of the Student Debt Crisis Center, previously said. Fortune. “It’s a drop in the bucket when it comes to the larger issue of student debt. “
In 2021, big Democrats like Senate Majority Leader Chuck Schumer, Senator Elizabeth Warren and Representative Alexandria Ocasio-Cortez pushed President Joe Biden to extend student loan forbearance, which eventually continued. until May 1st. What they still want from Biden, however, is a massive student debt cancellation. Biden has yet to sign such a plan, however.
“Although Progressive Democrats, as well as student debt activists, have continued to pressure the administration to use an executive order to write off up to $ 50,000 for each borrower, officials of the Biden administration have resisted such demands “, Elizabeth Tandy Shermer, author of Students Under Contract: How Government Guaranteed Loans Left Generations To Drown In University Debt, recount Fortune. “The education secretary [Miguel Cardona] even called it wishful thinking in a fall press release.
Could 2022 be the year of massive debt cancellation? Fortune spoke with student debt experts to get their advice.
Prospects for hope
During his presidential campaign, Biden said he would support forgive at least $ 10,000 in federal student loan debt per borrower. Since his inauguration, he has launched more targeted blows at the student debt crisis, but his rhetoric has changed on global debt cancellation.
Biden isn’t sure he can accomplish massive debt cancellation through executive order, and he has said he opposes massive debt cancellation because it would also help borrowers who have attended Ivy League schools like Harvard University and Yale University – students who ultimately had stronger careers and income trajectories.
Hounanian, however, is hoping that a massive debt cancellation could take place this year.
“We view 2022 as the year when large-scale debt cancellation becomes a reality, and we urge President Biden to use his authority to sign executive action to that effect,” Hounanian said. Fortune. “After some resistance, the president extended the hiatus on federal student loans until May 1 – this is a positive sign that the administration better understands the experience of borrowers and the barriers they face.”
Other policy experts argue that Biden does not have the executive authority to write off student loan debt.
“The president cannot implement new programs by executive action since only Congress has the power of the stock market”, Mark Kantrowitz, author of How to appeal for more college financial aid, recount Fortune. “If the president tried to forgive $ 1 trillion in student loans through executive action, he would face a legal challenge and ultimately fail.”
However, Congress is more likely “now than before,” he said, to pass legislation that would implement massive student debt cancellation. That said, he expects “some Democrats will balk at the price of forgiveness.”
“With Democrats controlling Congress through the thinner margins, every Democrat has a veto,” Kantrowitz said. “So it seems likely that the general loan forgiveness will be limited in amount and eligibility. “
More targeted relief
Other student loan experts believe we’ll see a more targeted student loan forgiveness from Biden instead of large-scale cancellations.
“The Biden administration now has a real track record that we can look at and find out how they envision providing student loan relief,” said previously Andrew Pentis, certified student loan advisor at Student Loan Hero. Fortune. “This is a history of targeted relief at specific borrowers, not the mass forgiveness proposals that many progressives have called for.
Shermer agrees: “Targeted relief seems more likely given the actions of the Education Department as well as official statements since Biden was sworn in.” She adds that the cancellation only seems likely for borrowers who attended now-defunct schools and civil servants; Biden has announced his forgiveness for the two.
Other policy insiders have already said Fortune that we might see pardons for the following groups: defaulting borrowers and low-income borrowers; teachers and parents; and the military and the borrowers who “really can’t pay off those student loans.”
Shermer argues, however, that there must be a more concerted effort to help “the many Americans who were found to be essential during the pandemic, even though they were technically working in the private sector.” They also need their debts canceled – not forgiven – because no one has done anything wrong by pursuing education that improves the workforce across the country and helps people become more informed members. and committed from this country, ”she said.
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