President Joe Biden is still considering his options for student loan relief, according to his chief of staff, as U.S. Sen. Elizabeth Warren and U.S. Rep. Ayanna Pressley renewed their call for the president to use his executive authority to forgive up to $50,000 in student loan debt for federal borrowers.
Warren and Pressley were hosted in Boston on Thursday by Attorney General Maura Healey, who described the student loan system as “fundamentally broken.” She said her office has used the legal system to prosecute predatory lenders and tried to help borrowers restructure payment plans, get their loans out of default and resolve billing disputes.
“But as much as we work on this, and we’ve worked together on this, we really need to address the systemic failures and the breaks in this system, and it’s a system that has recklessly saddled borrowers with loans they can’t possibly afford to repay,” Healey said.
Since taking office, Biden has moved to cancel student loans for borrowers defrauded by for-profit schools and paused the accrual of interest on student loans in default, but he has previously said he will not use his executive authority to forgive $50,000 in student loan debt. Instead, he has asked Congress to forgive $10,000 of student loans for federal borrowers.
White House chief of staff Ron Klain, however, said Thursday in an interview with Politico that Biden had asked Education Secretary Miguel Cardona to prepare a memo on his legal authority to forgive student loan debt, and would make a final decision based on that.
“Well, that’s great,” Pressley said in response. “Because all the conversations that I’ve been a part of with impacted people, they see that $10,000 as not even interest.”
Warren and Pressley believe that Biden has the authority under the Higher Education Act of 1965 to sign an executive order forgiving student loan debt, and they said canceling up to $50,000 for borrowers would wipe out debt for 85 percent of student loan borrowers, helping to close the racial wealth equity gap.
“If President Biden is serious about closing the racial wealth gap, if President Biden seeks to build back better, then he must use his executive authority to issue broad-based, across-the-board student debt cancellation,” Pressley said.
While many Democrats like Warren and Pressley view student loan cancellation as a positive economic policy that will improve the credit of many low-income graduates and allow them to buy homes, start businesses and assist in the COVID-19 recovery, conservatives view it as a misdirected policy.
U.S. Sen. Bill Cassidy, a Republican from Louisiana, recently wrote an oped for Fox News in which he argued that the greater use of income-based repayment plans would have a more far-reaching effect on those in debt without benefiting the wealthy and borrowers who can afford to pay.
According to officials, 855,000 borrowers in Massachusetts are carrying $33.3 billion in student debt, with an average loan balance of $39,000. Pressley said that 85 percent of Black residents feel they have no choice but to borrow if they want to go to college, and are five times more likely to default.
“The coalition behind student debt cancellation is the very same coalition that elected Joe Biden and Kamala Harris, and it is a powerful coalition,” Pressley said.
The elected officials were joined at the press conference in Healey’s office by a borrower, La’Kayla Carpenter, who said she she was on the verge of buying her first home when she found out she still had $23,000 in loan debt that was in default. When she offered her closing costs to have the loan removed from default, she said she was “berated” and denied.
“I’m just looking forward President Biden righting a wrong for so many of us out there,” Carpenter said.
Warren and Pressley pushed back against questions about whether loan forgiveness would disproportionately benefit wealthier borrowers who attended more expensive schools. Warren said two-thirds of students that attend state colleges and universities have to borrow money.
“We do a disservice when we perpetuate the idea that the face of student debt are white graduate students who went to Ivy League institutions. That is not the story of student debt,” Pressley said.
Warren said many of the 15 percent of borrowers who would be left with student debt after having $50,000 forgiven will be higher-income professionals with the capacity to pay off the remainder. She also said loan forgiveness would be good for student borrowers who have already repaid their loans because student debt is holding back economic growth.
“It’s time for real action so we can get this done and move to other issues,” Warren said.