Last week, the Biden administration announced that the President has tapped Education Secretary Miguel Cardona to research and draft a formal legal opinion memorandum outlining potential legal authorities that could be the basis for widespread student loan forgiveness implemented through executive action. The Department of Education will coordinate its efforts with Biden’s Justice Department, which is also reviewing possible legal avenues for student loan forgiveness, as well.
Student loan borrowers, labor unions, consumer protection organizations, and Congressional Democrats have been pushing Biden since last year to utilize executive authority to forgive student loans. But Biden has been hesitant to do so, and he has expressed skepticism that he has authority to do what activists want him to do.
As the Biden administration proceeds with its legal review of student loan forgiveness, there are four key questions that will ultimately need to be answered.
Can Biden Forgive Student Loans Via Executive Action?
While Biden has expressed support for student loan forgiveness in general, he has been resistant to using executive action to cancel student debt.
Many student loan legal experts have argued that Biden has authority to enact widespread student loan forgiveness using executive authority. Advocates have pointed to a provision in the Higher Education Act that, they argue, provides broad authority to the President, via the Secretary of Education, to “modify, compromise, waive, or release student loans.” Several consumer advocacy organizations and members of Congress (including Senator Elizabeth Warren) have argued that using this executive authority to cancel student loan debt is legally sound. Other advocates have pointed to the HEROES Act, which could provide emergency authority to the President to act in light of the ongoing pandemic; this was the basis of President Trump’s previous executive action to suspend interest and payments on government-held federal student loans.
However, Department of Education attorneys under former Secretary DeVos reached the opposite conclusion, noting that widespread student loan forgiveness would go well beyond what Congress intended when it originally passed the Higher Education Act and the HEROES Act.
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If Biden Forgives Student Loans, Who Would Be Eligible?
Biden has never expressed public support for cancelling all $1.7 trillion in outstanding student loan debt. If the administration determines that the President can forgive student loans through executive action, would he propose limitations or eligibility criteria?
There are a number of ways that student loan forgiveness could be restricted. The most obvious mechanism would be the amount of student loan debt that would be forgiven. Student loan borrower advocates have been arguing for $50,000 or more in student loan cancellation. But Biden has consistently advocated for a smaller, “targeted” amount of student loan forgiveness — specifically, $10,000. In December, Biden said he would be “unlikely” to cancel or forgive $50,000 in student loan debt.
Eligibility could also be limited to borrowers based on income, similar to stimulus check eligibility. Senate Majority Leader Chuck Schumer (D-NY) previously suggested that student loan forgiveness should be limited to borrowers earning under $150,000 per year.
The type of student loans at issue could also be relevant. Student loan forgiveness through executive action may have to be limited to federal student loans only, for example, because the Higher Education Act does not cover private student loans.
What Happens If Biden Determines He Cannot Cancel Student Debt Through Executive Action?
Biden has maintained that his preferred path for student loan relief would be for Congress to pass student loan forgiveness legislation. Currently, this route may be difficult, given narrow Democratic majorities in the House and the Senate, which gives party leaders hardly any room for error. Absent Republican support, GOP senators would likely filibuster any such legislation in the Senate. In addition, the current focus in the administration is Biden’s sweeping infrastructure package, which may take months to finalize. For these reasons, student loan borrower advocates maintain that executive acton would be the best way to enact student loan forgiveness.
If the Biden administration determines that student loan forgiveness via executive action is untenable, however, all is not lost. Pressure would grow on Congress to act by passing legislation.
When Will We Have An Answer On Biden’s Student Loan Forgiveness Review?
There is no concrete timeline for the Biden administration’s legal review of student loan forgiveness. The White House Chief of staff suggested last week the review could take weeks. It may be a safe bet, however, that the administration would have a response before September 30 — when the current extended moratorium on most federal student loan payments and interest expires.