ENDING STUDENT DEBT: Joe Biden’s Student Loan Plan: What’s Happening Now

June 21, 2021

Biden has extended payment forbearance and offered a proposal for free college, but is resistant to forgiving debt.

President Joe Biden campaigned on a platform that included ambitious changes for higher education as well as relief for student loan borrowers.

On Biden’s first day in office, he extended the student loan payment pause through Sept. 30, 2021.

Since then, he has laid the groundwork for student debt cancellation, but he has not offered a specific proposal or amount yet. Depending upon pending legal interpretation, Biden could use executive authority to cancel debt or ask that Congress pass a bill doing so.

On April 28, the White House unveiled its American Families Plan, which, among other things, proposes to increase Pell Grants, provides for free community college and steps up aid for schools that serve minorities. It must pass both houses of Congress before it becomes law.

Biden’s proposals — which also include plans for additional types of loan forgiveness — may or may not become law. Those that are passed could evolve significantly between now and then.

Broad student loan forgiveness
Even before Biden’s inauguration, his staff reiterated the president’s support for Congress to “immediately” cancel $10,000 of federal student loan debt per person as part of COVID-19 relief.

That amount could wipe out debt completely for nearly 15 million borrowers who owe $10,000 or less, according to federal data. The majority of student loan borrowers (roughly 67%) have more than $10,000 in debt.

But Democrats are still wrangling over both the concept and the amount of student loan forgiveness. Democrats and progressives alike believe Biden can use his executive authority to cancel debt; the president has asked Congress to send him a bill. Progressives want forgiveness of as much as $50,000 for all federal borrowers; the administration has underlined $10,000 as its target.

The back and forth grabs headlines, but there is no legislation before Congress that includes forgiveness. There is some indication that Biden is rethinking his stance on executive action. The moves so far:

Before the inauguration: Biden’s transition team said Biden would expedite a request to Congress for $10,000 in loan cancellation for all federal borrowers.

Feb. 4: Democratic lawmakers introduced a pair of resolutions in both houses of Congress reasserting a call made previously by Sens. Chuck Schumer and Elizabeth Warren for Biden to cancel $50,000 in student debt per borrower. White House Press Secretary Jen Psaki affirmed Biden’s support for some kind of cancellation but stopped short of promising action by executive order. “Our team is reviewing whether there are any steps he can take through executive action and he would welcome the opportunity to sign a bill sent to him by Congress,” Psaki responded via Twitter.

Feb. 16: Biden said during a CNN town hall that he would not forgive $50,000 through executive action. He said “I am prepared to write off the $10,000 debt but not $50 [thousand], because I don’t think I have the authority to do it.”

Feb. 19: A group of 17 state attorneys general called on Biden to forgive $50,000 in federal student loans per borrower through executive action, asserting he has the authority to do so under the Higher Education Act.

March 11: Biden signed the American Rescue Plan Act, which includes a provision that makes any student loan debt forgiveness tax-free from December 2020 through Dec. 31, 2025. Sen. Elizabeth Warren tweeted on March 6: “This clears the way for President Biden to #CancelStudentDebt without burdening student borrowers with thousands of dollars in unexpected taxes.”

April 1: White House Chief of Staff Ron Klain said, during a Politico Playbook interview, Biden is waiting on a memo he requested from Education Secretary Miguel Cardona that would explore the president’s legal authority to forgive student debt.

April 13: Warren, during a Senate subcommittee hearing on student loan debt, once again called on Biden to forgive student loan debt and argued the action would advance racial equity.

April 13: 416 organizations called for Biden to cancel federal student loan debt. They asserted it would “boost the economy, tackle racial disparities, and provide much-needed stimulus to help all Americans weather the pandemic and the associated recession.” The effort was led by Americans for Financial Reform, the Center for Responsible Lending, the National Consumer Law Center, Student Borrower Protection Center, Student Debt Crisis, and Young Invincibles.

May 6: Sen. Warren said in an event with the Washington Post that she and Sen. Schumer are still pushing President Biden to cancel $50,000 of debt per borrower.

May 20: In an interview with The New York Times, Biden suggested that he still supported the move to write off $10,000 of student debt, but not $50,000. The president told columnist David Brooks, “The idea that you go to Penn and you’re paying a total of 70,000 bucks a year and the public should pay for that? I don’t agree.”