SPY380.36-1.97 -0.52%
DIA309.45-4.53 -1.44%
IXIC13,192.35+72.96 0.56%

DJ Biden Administration Weighs Forgiving Student Debt by Executive Action

· 02/04/2021 17:11
By Josh Mitchell and Eliza Collins

The Biden administration is considering using executive action to forgive Americans' federal student debt, the White House's chief spokeswoman said Thursday, responding to pressure from Democratic lawmakers and progressive groups.

President Biden has previously questioned his ability to use executive action to forgive some or all of Americans' federal student debt. He has instead urged Congress to pass legislation to write off $10,000 in student debt for every borrower.

The White House shifted Thursday, saying it was open to forgiving debt without a move by Congress. "Our team is reviewing whether there are any steps he can take through executive action and he would welcome the opportunity to sign a bill sent to him by Congress," Jen Psaki, the White House press secretary, wrote on Twitter.

Ms. Psaki's comments followed a news conference earlier Thursday held by Senate Majority Leader Chuck Schumer (D., N.Y.), Sen. Elizabeth Warren (D., Mass.) and Reps. Ilhan Omar (D., Minn.), Ayanna Pressley (D., Mass.), Alma Adams (D., N.C.) and Mondaire Jones (D., N.Y.)

Mr. Schumer urged Mr. Biden to use his executive powers to eliminate $50,000 in student loan debt for all borrowers.

"This debt holds people back from buying cars, from going on vacation, from starting families, from getting the job they want to get. It's a huge anchor on our entire economy. And there's very little that the president could do with a flick of a pen that would boost our economy more than canceling $50,000 of student debt," Mr. Schumer said.

"The bottom line is this is one of those things that the president can do on his own. Sen. Warren and I have researched this thoroughly," he added.

Senate Republicans have resisted legislative efforts to forgive student debt, saying such a move would help many well-off families and cost taxpayers.

While canceling student debt would provide financial relief for millions, it would also raise questions of fairness for students who have already paid back their loans or avoided taking out large loans, and for people who never went to college.

A law enacted last year had suspended most borrowers' monthly payments on their student loans through September 2020 and then-President Trump extended the suspension through January of this year. Mr. Biden, who took office Jan. 20, used executive action to suspend the payments through September 2021, to help borrowers weather the coronavirus pandemic.

Mr. Biden has also said he supports canceling $10,000 of student loan debt for people with federal loans, but didn't include the proposal in a $1.9 trillion Covid-19 relief package his administration is pushing.

Senate Democratic leaders and progressive groups have argued for months that the president has the authority to forgive federal student debt unilaterally.

But some legal experts say forgiving student debt through executive action would be illegal. In the final days of the Trump administration, a political appointee serving as acting legal counsel for the Education Department came to that conclusion.

About 43 million Americans owe $1.6 trillion in federal student debt, Education Department data show. Americans owe more in student debt than in any other form of household credit except mortgages.

Most of the $1.6 trillion in federal student loans was originated by the Treasury Department. But a slice of that money was originated by private lenders and guaranteed by the federal government. Mr. Biden has said he wants to forgive student debt for borrowers of both types of loans. Forgiving student debt would be covered by federal taxpayers.

Congressional Democrats have urged Mr. Biden to forgive student debt through executive action during his first 100 days in office. Progressive groups have stepped up lobbying for the president to do so.

In December, Mr. Biden, as the president-elect, said on a call with news columnists: "It's arguable that I may have -- the president may have -- the executive authority to forgive up to $50,000 in student debt. Well, I think that's pretty questionable. I'm not sure of that. I'd be unlikely to do that."

Forgiving student debt carries at least one big risk -- that a judge would rule the move illegal, which could create confusion among borrowers.

There has been growing support among Democrats for some form of debt cancellation and free college in the last several years, with the push growing stronger after the coronavirus pandemic.

Write to Josh Mitchell at joshua.mitchell@wsj.com and Eliza Collins at eliza.collins@wsj.com.

(END) Dow Jones Newswires

February 04, 2021 17:11 ET (22:11 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.