The New York Democrat said progressives need to push the Biden administration to move further left on the issue after the incoming president said he was “unlikely” to use his authority to fully forgive student loan debt for individual borrowers.
“We have to push the Biden administration hard,” Ocasio-Cortez told Punchbowl News. “This whole thing. ‘We can’t cancel student loan debt’ is not gonna fly.”
Senate Democrats and progressives have called for more debt relief, with Sens. Chuck Schumer of New York and Elizabeth Warren of Massachusetts urging Biden to use an executive order to cancel $50,000 of outstanding federal student loans per borrower.
Warren said Biden could use existing executive authority under the Higher Education Act to order the Department of Education to cancel student loan debt. Previous estimates show that proposal would provide total forgiveness to more than 75% of borrowers and partial forgiveness for more than 95%.
But Biden has said it’s “arguable” whether the president has the power to forgive $50,000 in student debt without the approval of Congress.
“I’m going to get in trouble for saying this, [but] it’s arguable that the president may have the executive power to forgive up to $50,000 in student debt,” Biden told The Washington Post in December. “Well, I think that’s pretty questionable. I’m unsure of that. I’d be unlikely to do that.”
Such sweeping executive action would almost certainly face a legal challenge, and it’s unclear whether it could survive. Critics have argued that using such power exceeds the president’s authority granted by Congress. Canceling student loan debt would also add to the nation’s already-ballooning national deficit, which totaled a record $3.1 trillion for the 2020 fiscal year.
Biden has endorsed erasing some student loan debt “immediately” upon entering the White House, reiterating his support for a provision of the HEROES Act, which the Democrat-controlled House passed in the fall.
Under that legislation, economically distressed borrowers would immediately have $10,000 in student debt forgiven. The government would also cover monthly loan payments for people with private student loans until September 2021 and forgive $10,000 of their debt.
“Immediate $10,000 forgiveness of student loans, helping people up there in real trouble,” Biden said in November. “They’re having to make choices between paying their student loan and paying the rent. Those kinds of decisions.”
A Biden official later told Fox News that the former vice president does not want to issue an executive order and instead wants Congress to legislate on the matter.
Outstanding student loan debt has doubled over the past decade, nearing a staggering $1.7 trillion. About one in six American adults owes money on federal student loan debt, which is the largest amount of non-mortgage debt in the U.S. It has been cited as a major hindrance in people’s “economic life” by Federal Reserve Chairman Jerome Powell.
But analysis from the Committee for a Responsible Federal Budget shows that canceling student loan debt is an ineffective stimulus measure: Eliminating $1.5 trillion in loans would translate to just $90 billion or less in cash available to spend in 2021, and $450 billion over the next five years.
“The majority of those most affected by the current economic crisis likely have little or no student debt,” the analysis said, noting that more than 70% of unemployed workers do not have a bachelor’s degree.
“It is unlikely that broad student debt cancellation would be well-targeted toward those experiencing income loss. Nor is it well targeted toward those with low incomes,” the nonprofit agency said.