Will President Biden forgive student loan debt?

A letter from Justin Nelson, one of thousands received at the White House this month, says he is proud to vote for President Biden back in 2020. he had a request: Could the President follow through on his campaign promise and use the included pen to erase the thousands of dollars he owes in student loans?

The letter-writing campaign – #PensForBiden – is the latest attempt to sway Mr. Biden to a high-stakes dilemma as the midterm elections approach and much of his domestic agenda remains at a standstill: what to do with the $1.6 trillion that makes up more than 45 million dollars? people owe the government?

So far, Mr. Biden has extended his student loan pause four times due to the pandemic, most recently to August 31. Payments have now been suspended for more than two years in two presidential administrations.

But all this time creates problems. Many of the problems that have plagued the credit system for a long time have only gotten worse during the pause, and getting bills again will infuriate and frustrate millions of people who feel trapped in a broken system and crushing debt.

Now, some supporters believe that Mr. Biden will have no choice but to do what has divided his advisers: write off thousands of dollars of debt on every borrower with a stroke of the pen.

“If they want a smooth transition to debt repayment, I think the only way to do that is to write off the debt,” said Natalia Abrams, founder of the Student Debt Crisis Center, an activist group that supported the letter writing campaign. “I think we’re at a point of no return.”

Perhaps the most concrete signal came this week: Representatives Tony Cardenas and Nanette Diaz Barragan, two Democrats from California, said Mr. Biden discussed credit relief during a meeting with the Hispanic caucus of Congress on Monday.

Lawmakers said Mr Biden indicated he would like to provide some form of debt relief and is exploring his legal options.

“He is serious and wants to do something,” Mr. Cardenas said. “He wants to do something that we would love to do and he hopes to do it soon.”

Calls to write off student debt hung over Mr. Biden even before he became president, coming from borrowers and the progressive wing of his Democratic Party. He supported this idea during the election campaign in 2020. “I will make sure everyone in this generation writes off $10,000 of their student debt as we try to get out of this terrible pandemic,” he said. told the audience in Miami.

Senate Democrats lack the votes to help deliver on that promise, so executive action remains the only option. But close allies say some powerful members of Mr. Biden’s team didn’t want him to do it – some because they don’t agree with the idea of ​​forgiveness, and some because they don’t believe he has the authority.

“He’s got lawyers telling him he shouldn’t be doing this,” said South Carolina Representative James E. Clyburn, the third-ranked Democrat in the House of Representatives and a key Biden supporter. But Mr. Clyburn, the most senior black member of Congress, said the president’s actions had already brought about sweeping changes, including Abraham Lincoln’s Emancipation Proclamation and Harry Truman’s order banning military segregation.

“If executive orders can free the slaves and integrate the military, that could do away with debt,” Mr. Clyburn said.

Forgiving $10,000 per borrower would require the government to write off $321 billion in loans. analysis released by the Federal Reserve Bank of New York last week. BUT separate study the bank found that borrowers surveyed reported a 16 percent chance of a quick default if the moratorium ended.

Mr. Nelson, a 32-year-old bank employee from Minneapolis, said the pause freed up $120 a month for home repairs and other expenses.

“It was a big change and a relief,” he said.

BUT recent survey by Morning Consult found that more than 60 percent of registered voters were in favor of writing off student debt to some extent. But despite Mr. Biden’s campaign promise, his advisers are divided, three people familiar with the debate said.

Some see the debt relief as relief for critical voters, said the people, who spoke on condition of anonymity because they were not authorized to speak publicly. Others oppose it as bad policy or because they fear the economic consequences of putting more money into consumers’ pockets when inflation is skyrocketing.

But the pressure on Mr. Biden to act has only intensified.

Senator Elizabeth Warren of Massachusetts, whose pledge to write off up to $50,000 per borrower was the centerpiece of her 2020 presidential bid, and Senator Chuck Schumer of New York, the majority leader, led more than 90 Democrats in Congress. sending Mr Biden a letter last month asking him to “provide meaningful write-offs of student debt.”

Outside groups have seized on Congress’ failure to adopt other administrative priorities, such as protecting voting rights and Mr. Biden’s Rebuild Better program, as an excuse for the president to take matters into his own hands.

The New Georgia Project, a voter-registration group founded by gubernatorial candidate Stacey Abrams, has presented debt relief as an action that will serve Mr. Biden’s promise to put racial equality at the forefront of his presidency.

“Many of your administration’s legislative priorities have been stymied by obstructionist lawmakers,” the group wrote in a joint letter with the advocacy group Debt Collective, which was reviewed by The New York Times. “Student debt relief is a popular campaign promise that you, President Biden, can fulfill on your own.”

Astra Taylor, founder of the Debt Collective, said she believes resistance within the administration is waning as advocates oppose the belief that forgiveness will be a gift to wealthy college graduates, a rationale Mr. Biden cited last year. as a reason not to support $50,000 cancellation.

Such considerations still haunt Mr. Biden. Mr. Cardenas said he raised a similar issue on Tuesday, asking members of the Latino Group whether debt relief should be applied to borrowers from both public and private institutions. Mr. Cardenas replied that the exemption should be granted regardless of which university he attended.

Senior White House officials continue to consider debt relief. AT announcing the last pause Last month, Biden spokeswoman Jan Psaki said she “doesn’t rule out” the idea.

But Mr. Biden’s right to act unilaterally remains open legal question.

Last April, at the request of Mr. Biden, the Acting General Counsel for the Department of Education wrote an analysis of the legality of debt relief through enforcement action. The analysis was not released; version provided in response to requests for public records has been completely edited.

Forgiveness advocates say the education minister broad powers modify or cancel the debt that the Trump and Biden administrations relied on to freeze payments that began in March 2020.

Legal issues are possible, although it is not clear who will have standing. BUT Virginia law review article this month it was argued that no one could be the answer: states, for example, have little to say about the functioning of the federal credit system.

Leading Republicans remain strongly opposed. North Carolina Representative Virginia Fox, the top Republican on the Education and Labor Committee, called the latest extension of the taxpayer-funded giveaway “to Ivy League graduate students and lawyers” and said she fears it “sets the stage for full loan forgiveness.” ”

The timing of the latest renewal – ending two months before the interim deadlines – has some supporters thinking the same.

“You wouldn’t do this if you’re going to punch your base in the teeth eight weeks before they go to the polls,” said Mike Pierce, executive director of the Student Borrower Advocacy Center. “You’re doing this if you want the world to see you work for the people who put you in the White House.”

Advocates of borrowers believe that politics is not the only reason to forgive debts. It would also be a chance to correct long-standing problems.

The Department of Education is functionally the nation’s largest consumer bank, holding more loans than Americans owe on any non-mortgage consumer debt. But its outsourced lending services have been heavily criticized for years by government auditors and supervisors, with even core functions occasionally breaking down.

Some problems are being solved. The Biden administration has paid off $17 billion in debt for 725,000 borrowers by expanding and streamlining forgiveness programs for government employees and those scammed by their schools, among others. Last week, he offered additional forgiveness loans to millions of borrowers due to previous problems with counting payments.

But much remains to be done. The Department of Education was inundated with applicants after it expanded eligibility for millions of government employees. And a class-action settlement is being negotiated by nearly 200,000 borrowers who say their schools cheated them. recently brokesetting a trial this summer.

Even the logistics of collecting payments have become more complicated. Two major lenders quit last year, forcing the Department of Education to transfer millions of borrowers to new providers, a process that will likely take the rest of the year.

This month, the Biden administration took another hit from the six remaining servicers: the seven million people who defaulted on their loans — nearly one in five of all federal debtors — will be restored to good health.

Proponents say debt relief could make all of these problems easier to deal with. Proponents argue that writing off $10,000 per borrower would wipe out the debt of 10 million or more people, according to various analyses, freeing up resources to address structural weaknesses.

“We’ve known for years that the system doesn’t work,” said Sarah Sattelmeyer, director of higher education projects at the New America think tank. “The opportunity during this timeout to start fixing some of these major issues seems like a place where the Department of Education should be focusing.”

Voters like Ashley A. Mosley will be watching. Ms. Mosley, 21, a political science major at Albany State University in Georgia, said she was swayed to vote for Mr. Biden because of his support for debt relief.

Ms. Mosley, who also attended Alabama A&M University, has already borrowed $52,000 and expects her balance to grow to $100,000 by the time of graduation. Debt is already hanging over her head.

“I don’t think I’ll have enough money to start a family or buy a house because of the loans,” she said. “He’s just not designed for us to win.”