Biden asks for legal review on student debt cancellation: How could it impact you?
Since his support on forgiving student debt was made public earlier this year, Biden seems to have cooled on the issue, while members of his party haven't.
Forty-five million people in the US have student debt and those under forty owe more than half. The Center for Law and Policy Studies released a memo arguing for student debt cancellation and showed the burden of debt is held disproportionately by women and people of color. More than two-thirds of the student debt owed belongs to women and highlighted that cancellation up to $50,000 worth of debt could “alleviate the debt burden for nearly three in four Black households and increase Black wealth by a third.”
Economists worry that this amount of debt, which has reached the highest record ever record at 1.5 trillion dollars, is a drag on the economy. With such high levels of debt being owed, many experts worry that it could hinder the solid economic recovery needed to get the country to pre-pandemic levels. The Levy Institute at Bard College estimates that debt calculation could lead to an increase in GDP between “$861 billion and $1,083 billion for the entire 10-year period.” Additionally, the researchers found that the measure could lead to a decrease in the unemployment rate nationally and would not significantly impact inflation.
What actions has President Biden taken regarding student debt?
Upon entering office, the President extended loan forbearance for those with student debt through 1 October 2021. Echoing messages from the campaign trail, Biden later announced that he would support the cancellation of up to $10,000 in student debt if the law allowed him to do so through executive order.
On 1 April, the President tasked the Department of Education with resolving the legal question of whether a president can cancel debt using his presidential authority. In an interview with Politico, the President’s Chief of Staff Ron Klain said that once the President and his team have the report in hand, “he’ll look at that legal authority, he’ll look at the policy issues around that, and he’ll make a decision.”
The report was expected to be drafted quickly, but no news of its release has been made public. Additionally, recent reports, show that the White House is not likely to include funding for debt forgiveness in their annual budget. The exclusion of these funds may be an indicator that the measure may be out of the question this year.
Some leaders within the party, like Senate Majority Leader Chuck Schumer of New York, have concluded that it is within the Presidents ability to “ forgive $50,000 of the debt on his own,” continuing saying, “All you need is the flick of a pen.” Senator Elizabeth Warren has also pushed the administration to take up the issue, arguing that “canceling student loan debt is the single most effective executive action that President Biden can take to kickstart this economy.”
On the House side, Representative Alexandria Ocasio Cortez has responded to news that funds for debt cancellation will not be included in the White House’s budget, saying, “I believe in full student loan debt cancellation, but we have to push him to at the bare minimum a floor of $50,000 that Sen. Warren and Sen. Schumer have also advanced." There is also broad public support for cancellation, with a majority of voters in support, across political parties.