Next step for student loans, not just on Biden’s legal capacity to cancel student loans

Don’t expect student loan cancellation just because President Joe Biden has the legal capacity to cancel student loans.

Here’s what you need to know.

Student loans

After Biden extended student loan relief last week, Progressive Democrats are speculating that Biden’s next presidential act will be the large-scale student loan cancellation. Whether it’s $ 50,000, $ 10,000 or whatever, progressives say Biden can use the same legal authority he used to extend student loan relief until January 31 2022, including the temporary forbearance of student loans, to enact the cancellation of student loans. Once the U.S. Department of Education delivers its legal analysis and recommendation on student loan cancellation to the president, progressives hope Biden will be ready to act. For example, if the Department of Education believes that Biden has the legal authority to cancel student loan debt, is Biden simply enacting a full-scale student loan cancellation? This raises an important question: is it really that simple? Let’s explore.


Student loan cancellation: the legal authority of the president

Non-lawyers and lawyers alike have no shortage of rhetoric making bold statements such as:

  • “Biden can cancel student loans. “
  • “He already has legal authority.”
  • “All it takes is a ‘stroke of the pen’.

Some people simply repeat phrases spoken by friends or on social media, while others mirror phrases shared by student loan advocates in Congress such as Senator Elizabeth Warren (D-MA) and Majority Leader in Senate Chuck Schumer (D-NY). The main argument, among several, as to why the president can write off student loan debt looks like this: Higher education in 1965 grants the U.S. Secretary of Education (whom the president appoints and the Senate confirms) the power to ‘cancel student loan debt. Specifically, Section 432A of the Higher Education Act 1965 states that the Ministry of Education has the power “to modify, compromise, waive or release any right, title, claim, privilege or demand. , regardless of the acquisition, including any equity or redemption rights. “Based on this text, some supporters of the large-scale student loan cancellation claim that Congress has already granted the president the power to cancel student loans.

Opponents of this argument claim that the president does not have the existing legal authority to enact large-scale student loan cancellation. Why? They say Congress can authorize Biden to write off student loans, but no such authorization exists – either in the Higher Education Act of 1965 or elsewhere. Count Speaker of the House Nancy Pelosi (D-CA) in this camp. They say the text is vague and does not explicitly state that the President (or the US Secretary of Education) has the power to write off student loan debt. Opponents say that based on a reading adopted by progressives, it would be believed that Congress has granted the president the absolute right to write off in perpetuity all student loan debt of any amount for every borrower of student loans (which is an unlikely scenario). Finally, opponents cite the separation of powers clause in the US Constitution, which says that only the legislature (Congress) has the power to authorize spending and write off debt.


Student loan cancellation: not necessarily Biden’s legal capacity

Whether you are supporting or opposing large-scale student loan cancellation, the conversation about student loan cancellation has shifted to Biden’s unilateral legal authority to write off student loan debt without Congress. It’s almost turned binary: If the Education Department says Biden has legal authority, he’ll write off the student loan debt. If the Education Department says Biden has no legal authority, Biden won’t write off the student loan debt. However, it is more complex than this construction. First, the Department of Education provides legal analysis and legal advice to the president. Legal advice is not binding and is not considered law. The Trump administration, for example, found that the president did not have the unilateral power to cancel student loans on a large scale. Biden’s education department might come to the same conclusion or come to a different one. Ultimately, however, Biden will make the final decision – and Biden could agree or disagree with the Education Department’s findings.

Second, Biden has repeatedly said he doesn’t think he has unilateral executive power to enact a full-scale student loan cancellation. He made this statement as president, but he also speaks as a lawyer, vice president and longtime U.S. senator on the Senate Judiciary Committee. Biden’s claims are likely supported by legal counsel who has reviewed the relevant law and concluded the same. So Biden’s education department is unlikely to suddenly come to an alternate conclusion and recommend that Biden now have the legal authority to enact a full-scale student loan forgiveness. It’s been nearly six months since the Education Department began this legal analysis, and it’s possible they’ll change course so that Biden has political cover to write off student debt. However, Biden has been consistent: he supports $ 10,000 student loan cancellation and he wants Congress to write off student debt. However, even though student loan cancellation would help student loan borrowers, that doesn’t mean Biden will cancel everyone’s student loans.


What will the student loan forgiveness really be based on

It is possible that the Department of Education will determine that Biden has the existing authority to write off student loan debt. After all, it is a non-binding legal note. If this happens, it doesn’t mean your student loans will be canceled. There will likely be legal challenges, including in the United States Supreme Court, which could delay the implementation of any student loan cancellations. Here’s the reality: The next steps for canceling a student loan won’t necessarily be based on Biden’s legal authority, or lack thereof. The legal question will be important, but there are also other political and political considerations, for example.

Political considerations

Politically, both sides want to fix higher education. The main political challenge is that the cancellation of student loans is an issue carried by progressive Democrats. Most moderate Democrats and conservative Democrats do not support large-scale student loan cancellation. Republicans don’t support him either. This is why Congress cannot reverse the cancellation of a student loan, regardless of the amount. Canceling student loans is not a popular political position in Congress, despite the headlines in the media. Then, about 80% of the adult population in the United States either do not have a student loan or have not gone to college. While student loan borrowers would welcome student debt cancellation, there are political risks for the congressional midterm elections and the president’s re-election efforts if he proceeds with student debt cancellation. . On the contrary, not canceling student loans also has political implications among progressive Democratic voters.

Political considerations

The bigger question about student loan cancellation is, will all of Biden’s past and future student loan actions be enough to offset the need for a new student loan cancellation? Simply put, Biden has taken aggressive steps to improve the results of student loan borrowers. For example:

Some of them are political achievements and others are political prescriptions. The Department of Education held hearings and accepted public comment to improve student loans for all borrowers. As of March 2020, under the Trump and Biden administrations, student loan borrowers will also get over $ 110 billion in student loan cancellations by January 2022. For some observers, the amount of student loan cancellations is enough ( or some think it is excessive). Coupled with this long list of student loan changes, the rationale for large-scale student loan cancellation may fade. Why? Biden has passed a targeted student loan cancellation under current law and will continue to do so. He also pledged to change student loans so that student loan borrowers are more fairly affected. Will all these actions be enough if the student loans are not canceled?

The flip side of this argument is that $ 110 billion in student loan cancellations – or $ 5 billion per month since the start of the Covid-19 pandemic – is a relatively small amount of the $ 1.7 trillion in debt. outstanding student loans. If Biden were to write off up to $ 50,000 in student loan debt (the Warren-Schumer Plan), the total cost could rise to $ 1,000 billion and pay off the student loans of 36 million federal student loan borrowers. . Expect increased lobbying from members of Congress who expect Biden to cancel student loans by Jan.31, 2022. Student loan relief for an additional four months is welcome, but progressives and others Student loan advocates won’t stop until a lot more student loans are canceled. What ultimately happens next will not be based solely on Biden’s legal authority. There will also be political and political considerations underlying any action on student loans.

With the uncertainty surrounding large-scale student loan cancellation, make sure you have a game plan for your student loans. This means taking control of your student loans today and not waiting until February 2022. Here are some popular options to help you save money:


Student loans: more reading

Here’s what Biden’s student loan relief means for your student loans

Biden extends student loan relief until January 31, 2022

Student loan cancellation focused today on Capitol Hill

Student loan cancellation may help more borrowers, but that doesn’t mean Biden will cancel everyone’s student loans


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