Democrats plan $ 50,000 in order-in-council student loan cancellation
House and Senate Democrats are stepping up their plans to cancel student loans.
Here’s what you need to know – and what it means for you.
Senator Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) to hold press conference today present a resolution to Congress calling on President Joe Biden to write off up to $ 50,000 in student loans for student loan borrowers. As first reported by Fox News, the resolution calls on the president to use executive action to cancel student loans in the wake of the Covid-19 pandemic. The resolution is similar to a resolution that Schumer and Warren introduced in September. Since then, Schumer has clarified that their proposal does not apply to all student loan borrowers. Rather, only student loan borrowers with federal student loans who earn less than $ 125,000 would qualify. The student loan forgiveness would be tax free for the student loan borrowers. In the United States House of Representatives, Representatives Ayanna Pressley (D-MA), Representative Ilhan Omar (D-MN), Mondaire Jones (D-NY) and Alma Adams (D-NC) will also endorse the resolution. Pressley and Omar have both been strong supporters of canceling student loans, and Omar recently supported a New wealth tax to pay for student loan cancellation.
Can a President Cancel Student Loan Debt?
Warren and Schumer say canceling student loans will boost the economy, reduce disparities, increase family formation, encourage new businesses, improve retirement savings, boost home buying and help relieve a generation of borrowers with crushing consumer debt. Earlier this week, Warren tweeted, “Canceling student debt would immediately put money in the pockets of millions of Americans. It would help pull our economy out of this crisis. And we don’t have to wait for Congress: the Biden-Harris administration can do it with its executive authority.
According to Warren and Schumer, the Higher Education Act of 1965 (which is the current law) gives the United States Secretary of Education the legal authority to cancel student loans. In their view, the president already has the legal authority to cancel student loans. They refer to Section 432 (a) of the Higher Education Act, which grants the US Secretary of Education the power to “modify, compromise, waive or release any right, title, claim, lien or demand, regardless of acquisition, including any equity or right of redemption. On this basis, they argue that it is indisputable that the President (through the Secretary of Education) can cancel student loans for all student loan borrowers.
Bad news for canceling a student loan?
Biden wants to cancel student loans immediately. There is no disagreement on when to cancel the student loan. The disagreement concerns how much student loan forgiveness, who is eligible and the procedure by which there is cancellation of the student loan debt. Biden wants Congress to legislate $ 10,000 student loan forgiveness or in the new recovery plan. There have been several proposals in Congress to cancel student loans, in addition to existing student loan cancellation programs such as income-based repayment and civil service loan forgiveness.
Oddly enough, Schumer and Warren do not pursue a bipartisan approach to canceling student loans, nor even seek unity with the president, who is a fellow Democrat. This does not mean that Republicans support the cancellation of the student loan; they probably won’t. However, Biden supports student loan cancellation, so why not come up with a universal student loan cancellation plan with support from Congress and the White House? Instead, Schumer and Warren are apparently pressuring the president to write off more student loan debt and bypass the traditional legislative process. The discord between Democrats is potentially bad news for student loan cancellation. Despite the proposed resolution, Biden said he’s unlikely to cancel student loans through an executive order. Biden has issued several executive orders and has chosen not to cancel student loans because he doesn’t think the law makes it clear that he has the authority to do so. Biden, a former US senator from Delaware, understands that Congress is the branch of the federal government with the authority to make federal spending. Cancellation of student loans, which is arguably a form of “expense,” would traditionally fall within the purview of Congress, not the executive. Biden would likely argue that the Education Secretary can write off student loan debt in certain situations such as fraud or total and permanent disability, for example. However, it is unlikely that Congress authorized the executive to unilaterally cancel everyone’s student loan debt without saying so explicitly in the legislative text.
Will your student loans be canceled?
Will your student loans be canceled? Warren and Schumer turn up the pressure on Biden. There is no consensus within the Democratic Party on the amount of student loan forgiveness and who will write off the student loan debt. Biden proposed to cancel student loans in three ways. If Democrats don’t align with outright student loan cancellation, they could universally support other means of canceling student loan debt. However, if Recent tweets are one indication, it has become increasingly clear that canceling a student loan is not a foregone conclusion. This is potentially bad news for student loan borrowers. It’s also unclear whether Democrats think they can pass legislation to cancel student loans. If they could, why continue to pressure the president with a resolution? Therefore, do not rely on the automatic cancellation of your student loan. Instead, get a student loan game plan. Start with these three options, all free: