Will the Biden administration give students $ 10,000 in loan relief?
Student debt has been a hot topic since the early days of the Democratic Primary, with Senators Bernie Sanders and Elizabeth Warren both offering a wide offer student debt cancellation plans. Americans hold more than $ 1.6 trillion in student debt, more than the cumulative amount of credit card debt, although far behind that of mortgages.
President-elect Joe Biden initially disagreed with blanket student debt cancellation, although he intended to Public Service Loan Discount Program (PSLF) and make income repayment plans (IDRs) more generous. However, once he became the Democratic candidate, he expanded his plans and adopted pieces of the proposals of his former rivals.
After the pandemic struck in March, Senator Warren called for $ 10,000 in student loan cancellation as part of a larger agreement on coronavirus relief and stimulation. It wasn’t part of the CARES Act, but Warren convinced a number of Democrats about the idea and Biden was one of them. Since then, Biden and Vice President-elect Kamala Harris both pitched the idea.
But Biden’s plan could face a tough climb in Congress if Republicans maintain control of the Senate. Currently, there are two Senate races that have yet to be called, in North Carolina and Alaska, and two in Georgia heading for a second round in January. At this point, the Democrats are unlikely to win the North Carolina and Alaska races, which means they would have to win both Georgia races to get a 50-50 split.
That would mean Vice President-elect Kamala Harris would be the tiebreaker to claim a majority for Democrats in the Senate. But that would still require all Democrats to back the measure, including more moderate members like West Virginia’s Joe Manchin. And that means eliminating filibuster if Democrats have a majority.
Another possible avenue for student debt cancellation is executive action. In January of this year, Senator Warren released a update of its student debt cancellation plan that she said she could promulgate on the first day as president, under the authority of “compromise and change” given to the Secretary of Education in the Higher Education Law. Warren was recently joined by Senate Minority Leader Chuck Schumer and other Democrats calling on the next president to cancel up to $ 50,000 in student debt under this same authority.
Biden has not indicated he will go down this route to pass his $ 10,000 proposal, but Warren and other advocates will likely push a Biden administration to act under that authority. However, this approach poses a few questions. Some argued that this was too broad an interpretation of the law. Others pointed out that the cancellation of student loans is often considered taxable income under the tax code.
If the Biden administration chose to pursue this approach, it would likely face a challenge in court. It is unclear who might have legal status to bring an action or how a judge would rule, but given the number of Tory judges appointed by President Trump and Senator McConnell in recent years, it is likely that they find a judge who would view politics unfavorably.
While much is still unknown about Biden’s willingness to act using executive power or whether it would stand in court, there are still things Biden can do to help student borrowers.
Payments and interest were suspended on federal student loans since March, but which expires at the end of the year. President Trump has not said whether he will extend the suspension, but it is likely that President-elect Biden would, at least during the pandemic. This alone could mean that many borrowers receive payment relief for well over a year, and could even lead to debt forgiveness for many under the PSLF or IDR.