Can Joe Biden really cancel student loan debt?
Here’s what you need to know.
Student loan forgiveness has been a hot topic on the campaign trail and in the halls of Congress. From Sen. Bernie Sanders (I-VT) wanting to forgive all $1.6 trillion of student loan debt to Sen. Elizabeth Warren (D-MA) proposing to forgive student loans for 95% of Americans, presidential candidates have touted their plans for your student loans. In Congress, House Democrats proposed to forgive $10,000 of student loans for borrowers struggling financially, while senators said $10,000 of student loan debt should be cancelled. There have even been proposals to cancel $50,000 of student loan debt and to forgive student loans due to Coronavirus.
Biden: Cancel student loan debt
In response to Covid-19, Biden proposed a Covid-19 student loan forgiveness plan to cancel up to $10,000 in student loan debt for each borrower. However, Biden does not support wide-scale student loan forgiveness that would forgive all your student loan debt, for example. Does Biden support any other student loan forgiveness? Yes, Biden would forgive all undergraduate tuition from two- and four-year public colleges and universities. Biden also would forgive all undergraduate tuition for borrowers who earn $125,000 or less per year and who graduate from a private Historically Black Colleges and Universities (HBCU’s) and Minority-Serving Institutions (MSI’s).
Can a president cancel student loan debt?
While candidates and legislators alike can offer proposals, it’s questionable whether a president —without Congress — can solely cancel student loan debt. Biden, who was a U.S. senator for nearly 40 years and is familiar with separation of powers, likely would work with Congress to implement legislation to cancel student loan debt (rather than act unilaterally as president). Traditionally, when presidents or presidential candidates propose policy initiatives, their plans are usually prescriptive—meaning that Congress should take the prescribed action. Or, the president’s administration will work with Congress to pass legislation. If Republicans maintain control of the Senate after the November election, however, it may be more challenging to pass any comprehensive student loan forgiveness bill.
It’s important to note that not everyone agrees that only Congress can cancel student loan debt. For example, Warren, as a presidential candidate, said that the U.S. Department of Education has the authority to cancel student loan debt. Warren has been a leading advocate for student loan forgiveness, and Student Debt Crisis, a leading student loan advocacy non-profit, sent Warren a student loan forgiveness petition signed by 1.2 million people. Warren said that if she were elected president, she would instruct the Secretary of Education to begin student loan forgiveness on day one of a Warren administration. “I will start to use existing laws on day one of my presidency to implement my student loan debt cancellation plan that offers relief to 42 million Americans — in addition to using all available tools to address racial disparities in higher education, crack down on for-profit institutions, and eliminate predatory lending,” Warren, a former Harvard Law School professor, said during her presidential campaign.
While the Education Department can cancel federal student loans due to death, disability or fraud, for example, others argue that a broad-scale student loan forgiveness plan would need congressional legislation based on a separation of powers argument.
During the last two presidential administrations, a president has not cancelled student loan debt through the Secretary of Education. Currently, President Donald Trump extended student loan relief under the Cares Act, the $2.2 trillion stimulus package that Congress passed in March, until December 31, 2020. That means that certain federal student loan payments are paused, interest will not accrue on those loans and any non-payment of those loans will count toward public service loan forgiveness requirements. There also will not be collection of defaulted federal student loan debt during this period. While Trump implemented this extended student loan relief through an executive memorandum, Trump did not cancel student loan debt, which typically would require congressional approval. In Congress, the latest Republican stimulus bill does not include student loan relief or student loan forgiveness. While Democrats in the House and Senate have proposed student loan debt cancellation, Congress has not passed legislation. Since Biden and his running mate, Sen. Kamala Harris (D-CA) both have served in Congress, it’s more likely they will push their student loan agenda through Congress, rather than taking unilateral action on any student loan debt forgiveness.
How to pay off student loans
Even if federal student loan debt payments are temporarily paused, your student loan balance and interest rate will not change when payments resume. That’s why you should act now to develop a student loan game plan to pay off student loans. What’s the best way to pay off student loans? Start with these four options, all of which have no fees:
Resources: Student Loans