President Biden is looking for different options to forgive most, if not all, of federal student loan debt, a move that would excite some of his most loyal followers and financially struggling students across the country, but which is far from campaign promises to offer limited relief.
The president shared his plans during a 90-minute meeting at the White House on Monday with members of the Hispanic caucus in Congress, exchange participants told CBS News. The move could affect more than 43 million borrowers with more than $ 1.6 trillion in federal student loan debt, the second-largest U.S. debt behind mortgages.
Earlier this month, the White House said it was extending the pandemic era pause in federal student loan payments as of Aug. 31, a measure that has helped approximately 41 million borrowers save $ 5 billion in monthly interest payments, according to the Department of Education.
At a White House press conference on Monday, press secretary Jen Psaki reiterated that the administration would make a decision on the cancellation of some student loan debt by the end of August or the pause s ‘would extend even further. The president has said in the past that he supports the cancellation of up to $ 10,000 in student loan debt. Psaki said it had nothing to do with the issue or how the cancellation of student loan debt would work.
Shortly after Psaki’s briefing and right in the west wing aisle, the issue of student loans arose in the president’s room. meeting with Latin legislatorsan exchange that also included a detailed conversation about immigration policy, environmental justice and the next midterm electionsaccording to attending lawmakers.
When members of the Hispanic Caucus mentioned student loans, the president said he asked his attendees to explore their options, a signal to lawmakers that he might be willing to go further than he promised during the campaign.
“They are looking at different options on what they can do. Forgive it completely. That was our request,” said one of the lawmakers in attendance, who asked for anonymity to speak openly about the meeting.
It was not immediately clear how quickly the president could act, but the August 31 deadline, set for early voting in several states before the midterm, is seen by many Democrats as a natural point to make a move. such voting. announcement.
“As for the outgoing president talking about canceling student loans 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 canceling student debt is very popular. It’s very popular among specific groups of voters that the president has to win for this upcoming election, and the fact that he’s using the cancellation. Debt settlement as a tool for Talk to these communities, for me this is a small change “.
Hounanian noted that the White House has said it has been considering canceling student loan debt for some time. The ongoing public message that the administration is examining 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 actions to forgive the federal student loan debt since the president took office more than a year ago.
“What is the whole point of this argument being, Biden, or any president, why, under the law, will he violate federal statute by forgiving student board loans other than what he has been doing with existing programs?” said Betsy Mayotte of The Institute of Student Loan Advisors. “There are people who say they have that authority under the law to do that, and there are those who say that apart from a small portion of Perkins loans, they don’t have it.”
The Perkins program, which provided low-interest loans to low-income students, stopped making new loans in 2017.
The cancellation of student loan debt would also depend on whether a group or individual is challenging the action. This move could lead to a messy legal battle that leaves borrowers in limbo for a while. That is why the White House and some experts and officials on student loans have suggested that lawmakers should be the ones to take action, as the legislation would not face the same legal challenges. But it is unlikely that Congress, which is very divided, will be able to pass a bill on this issue.
“Ultimately, it would be undone by this approach,” said student loan expert Mark Kantrowitz on the cancellation of student loan debt through executive action. He argued that the best way to forgive debt 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, Biden said he supported the cancellation of $ 10,000 in student loan debt and congressional action. But some top Democrats they have demanded that he go further and use the executive action to cancel $ 50,000 in student loan debt per borrower.
“President Obama did it, President Trump did it, and now President Biden has done it repeatedly. Power is clearly there,” Sen. Elizabeth Warren, a Democrat from Massachusetts, told Face the Nation on Sunday. from CBS.
In a new analysis, the Federal Reserve Bank of New York estimated that canceling $ 50,000 in student loan debt would forgive the total balance of about 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 been out the door for decades.
Advocates of debt cancellation of student loans have also argued that it is a way to build racial equity. Studies show that black borrowers often have to incur larger amounts of student debt for higher education. After graduation, the average student debt of black borrowers is higher than the burden of white and brown borrowers, according to studies.
The race, in addition to providing financial assistance to younger and working-class Americans burdened with a debt burden that they may not have fully understood when applying for loans, are the main reasons why members of the Hispanic caucus they continue to push for loan relief.
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