No Joe Biden can’t forgive $ 50,000 in student loans
Despite the headlines and Twitter feeds to the contrary, Joe Biden cannot forgive $ 50,000 in student loans through an executive order.
Here’s what you need to know.
The hashtag #cancelstudentloans popped up on Twitter in the past day, as students, student loan borrowers and education advocates hope President-elect Joe Biden can help ease the debt burden student. Today, according to the latest student debt statistics, 45 million borrowers collectively owe over $ 1.6 trillion in student loans.
Amidst the excitement of cancel student loans, there has been some confusion over comments attributed to Senate Minority Leader Chuck Schumer (D-NY) regarding the president’s ability to cancel student loans. Specifically, some have claimed that Schumer said Biden could write off $ 50,000 in student loans through an executive order. This has led to a wave of enthusiasm on social media about when student loans will be canceled and whether Biden would use this so-called presidential power.
However, despite what you may have read, the president probably does not have the power to write off $ 50,000 in student loans through an executive order. Let’s eliminate all confusion.
Proposal: Cancel student loans
Schumer and Senator Elizabeth Warren (D-MA) proposed a resolution in Congress which would allow the president to cancel up to $ 50,000 in student loans thanks to executive action. Above all, this is only a proposal. It is not the law. A resolution is the collective sentiment of senators, but is considered soft law. Therefore, Biden does not yet have the power of Congress to write off $ 50,000 in student loans.
Here is the proposal:
- Federal student loans: The resolution calls for the cancellation of federal student debt, not private student debt.
- Student loan remission: Currently, some forms of student loan forgiveness result in income tax on the amount of canceled student loans. This resolution calls for any student loan forgiveness to be tax free.
- Chronology: There is no time limit for the president to cancel student loans.
- Suspend student loans: According to the resolution, the president is expected to suspend federal student loan payments and accrued interest for the duration of the Covid-19 pandemic. Currently, this student loan relief expires on December 31, 2020.
Warren and Schumer say that if the president cancel student loans, this would provide the necessary economic stimulus. If not forgiven, Schumer and Warren believe student loans will continue to increase income inequalities and disparities, among other social issues, for student loan borrowers.
Can a president cancel student loans?
Most legal scholars believe that only Congress, and not the president acting unilaterally, has the power to write off student loan debt. The US Constitution provides for three separate but equal branches of government, but only Congress has the power to spend the federal government. It can be argued that the cancellation of student debt is a type of federal spending.
However, as Warren and others have noted, the Higher Education Act of 1965 (which is the current law) gives the United States Secretary of Education the legal power to cancel student loans. In their view, the president already has the legal authority to cancel student loans. They refer to Section 432 (a) of the Higher Education Act, which grants the United States Secretary of Education the power to “modify, compromise, waive or release any right, title, claim, privilege or demand, regardless of acquisition, including any participation or right of redemption. While the Secretary of Education relied on this provision to write off student loans, most student loan debt cancellations have been relatively small compared to current proposals for blanket student loan forgiveness. For example, student loans can be canceled due to fraud, school closure, or total and permanent disability. It is unlikely, however, that Congress will grant the president the unilateral and uncontrolled power to cancel student loans of any amount for each student loan borrower without any approval from Congress. It is more reasonable to assume that Congress authorized the Secretary of Education to cancel student loans in limited circumstances as a matter of procedure. If a president sought to write off all student loan debt, for example, it’s more likely that Congress would have intended to retain its authority over student loan debt forgiveness and federal spending.
Cancel student loans
Will Biden cancel student loans? The bottom line is that there are several proposals in Congress for the forgiveness of student loans. To date, Congress has not passed any of these proposals, including the resolution to cancel $ 50,000 in student loans. The composition of the US Senate could have an impact on the future of student loans, including calls to cancel student loans. Currently, Senate Republicans control the Senate, although the second round of Senate elections in Georgia could impact the balance of power. If the Democrats win the Senate, Schumer and Warren will have a clearer path for moving their proposal forward. If Congress grants the president such authority, there is no guarantee that Biden would write off student loans, let alone up to $ 50,000 in student loan debt for each borrower. Biden said he was backing up to $ 10,000 for student loan cancellations. If the Republicans retain control of the Senate, this proposal will remain just that – a proposal.
What’s the best way to pay off student loans? Here are three smart approaches, all free: