Student loan debt in the United States has swelled to over $1.5 trillion collectively held by over 42 million borrowers. The massive size of this debt and the scale of the borrowers affected have prompted contentious conversations regarding what to do about it, including potential options for relief.
The idea of federal student loan forgiveness gained traction during the 2020 Democratic presidential primary. In her campaign, Sen. Elizabeth Warren (D-Mass.) proposed to cancel federal student loan debt up to $50,000 for most Americans, citing the overall negative effects that she believed the debt had on the economy writ large because of its depressing effect on consumer spending. Warren estimated that such a plan would cost approximately $650 billion.
Later, after Warren bowed out of the primary, Biden signaled receptivity to her plans regarding student loan debt, overall backing another of Warren’s proposals that had called for student loan debt to be eligible for relief in bankruptcy proceedings. As well, Biden called for forgiveness of $10,000 per borrower in light of the economic impacts of the COVID-19 pandemic during his campaign.
Since taking office, Biden has issued an executive order extending a pause on federal student loan payments through September but has so far declined to move forward with executive authority on forgiveness. At a CNN town hall Feb. 16, Biden signaled reluctance to act without Congress on student loan forgiveness.
One of the central debates facing Democrats in this conversation is what Biden can do through executive action. Progressives have insisted that the Higher Education Act gives Biden and the Secretary of Education broad authority to cancel federal student loan debt.
The Biden Administration has urged Congress to pass $10,000 student loan forgiveness. Though a step down from progressives’ ambitions, this plan has broad popular support as a Morning Consult poll found that 56 percent of all Americans support the plan, which is consistent with Biden’s remarks on the campaign trail.
That plan, however, might face roadblocks in securing passage through Congress. Despite the issue gaining significant support among Democratic lawmakers, Republicans have broadly resisted calls for extensive forgiveness, making passage unlikely in the equally-divided Senate.
Critics have alleged that the plan does not take into account borrowers that recently have paid off their loans. Moreover, they note that doing so would also be only a temporary fix to the soaring cost of higher education, arguing that soon a new generation of borrowers will find themselves in the same debt trap.
Relief has not yet been included in the stimulus package being negotiated by the White House and Congress.
Progressive activists, lawmakers and their allies have continued to put pressure on the Biden Administration, citing both the economic consequences of huge federal student loan debt and framing the issue as a one of racial justice.
In the process, progressives have attracted a number of significant allies. Senate Majority Leader Chuck Schumer (D-N.Y.) wrote an Op-Ed with Warren calling for Biden to cancel the debt using the existing executive authority. Democratic senators led by Schumer and Warren introduced a non-binding resolution in the Senate calling on Biden to act unilaterally to cancel up to $50,000 per borrower.
Reps. Ayanna Pressley (D-MA-07), Ilhan Omar (D-MN-05), Alma Adams (D-NC-12), Jamaal Bowman (D-NY-16), Mondaire Jones (D-NY-17) Maxine Waters, (D-CA-43) and Ritchie Torres (D-NY-15) are spearheading a similar effort in the House.
With negotiations over the final form of Biden’s American Rescue Plan taking center-stage, the debate over student-loan forgiveness is likely to be temporarily set aside. However, given the number of prominent Democrats now backing the issue, debate may reignite later in the year when Biden’s temporary suspension of loan payments runs out.