There’s something Biden doesn’t tell student loan borrowers


During last year’s presidential campaign, then-candidate Joe Biden offered to write off $ 10,000 per student loan borrower. Since taking office, he has certainly made progress on the forgiveness front. Right off the bat, Biden ordered the U.S. Department of Education to prepare a note to see if the president had the power to bypass Congress and erase up to $ 50,000 per borrower, which, of course, is far superior to his campaign proposal. Meanwhile, its chief education official, Education Secretary Miguel Cardona, this year issued five rounds of student loan cancellations totaling $ 11.2 billion and covering everyone from borrowers with disabilities to defrauded borrowers.

Seen from the outside, it would be easy to assume that a broad waiver on student loans could happen any day now. After all, earlier this week Cardona said forgiveness “conversations continue” inside the White House. But there’s something education insiders say Fortune that, well, the Biden administration doesn’t tell borrowers: unlikely soon.

For starters, the executive is unlikely to have the legal authority to enact a large student loan forgiveness. While the US Department of Education has been able to issue smaller rounds of remissions (equivalent to less than 1% of total US student debt of $ 1.7 trillion), these actions are legal because they only refine or expand existing rebate programs. It is very different, legally speaking, to grant a “mass” pardon to all borrowers through executive action. Indeed, this summer, House Speaker Nancy Pelosi told reporters that Biden did not have the authority to do it, adding bluntly that “the president cannot do it … it is not even a discussion “.

But some higher education policy makers believe the Biden administration may already have the answer. They point out that White House chief of staff Ron Klain told Politico in March that the memo on whether the president has the power to write off student loan debt would be ready in just “weeks.” Seven months have passed since then and still no memo.

“The administration may not be the top among borrowers, but it is certainly sending mixed signals,” said Carlo Salerno, vice president of research at CampusLogic and longtime higher education economist. Fortune. “Almost all industry experts know that the Education Ministry is still not in the process of ‘investigating’ after seven months whether the blanket cancellation of loans by executive action is allowed. Don’t close the door on it [broad student loan forgiveness] more and more resembles a political play. Why do all these other loan discounts and ignore the 800 pound discount gorilla? ”

This outcry from Democratic lawmakers raises another side of the forgiveness discussion.

If the cancellation of the student loan does not go through an action of the executive, it will have to go through Congress. The latter option is something that would be difficult to predict anytime soon.

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