Some Democrats Call for Student Loan Forgiveness by Executive Order.
Just a few months ago democrats decried President Trump’s use of executive action to extend stimulus relief to millions of Americans. With Biden set to take office in January, however, the tables have turned. Now some are urging Biden to forgive billions if not more than a trillion dollars of student loans with the stroke of a pen.
Senator Chuck Schumer (D-NY) wants Biden to forgive up to $50,000 in student loans per borrower. Schumer has called for not only canceling this debt, but also eliminating the tax liability that results from loan forgiveness. He believes Biden has the authority to cancel student loans with an executive order under the Higher Education Act.
Senator Elizabeth Warren (D-MA) is also calling on Biden to forgive up to $50,000 in student loans. Before the election, she introduced a resolution along with Sen. Schumer calling on the next president to forgive up to $50,000 in student loan debt. She claims that forgiving student loans would be the “single biggest stimulus we could add to the economy.”
Rep. Alexandria Ocasio-Cortez (D-N.Y) has also joined the calls to cancel student loans. She has said that Congress is not needed to forgive student loans, and that all that’s required is to “push” Biden to do it.
Can Biden Legally Cancel Student Loans with an Executive Order
If Biden follows this advice, student loan borrowers could wake up on January 21, 2021 with most if not all of their student loans forgiven. The question remains, however, whether such an executive order is legal.
At first glance this seems like an easy question to answer. Certainly our government of checks and balances doesn’t vest in one person the authority to spend a trillion dollars of taxpayer’s money. Even Alexander Hamilton would bristle at such an idea. Of course, he never met Senators Schumer or Warren.
They claim that the Higher Education Act of 1965 vests in the President the authority to do pretty much as he (or she) pleases when it comes to federal student loans. Citing a Harvard Law School study, they believe the President does indeed have the authority to cancel student debt:
“Congress has already granted the Secretary of Education the legal authority to broadly cancel student debt under section 432(a) of the Higher Education Act of 1965 (20 U.S.C. 1082(a)), which grants the Secretary the authority to modify, ‘... compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.’ The Department of Education has reportedly used this authority to implement modest relief for federal student loan borrowers during the COVID-19 pandemic.”
Others disagree. They argue that while the Higher Education Act does vest in the agency the power to modify debts in specific circumstances, it doesn’t give the President the blanket authority to wipe out student loans. What both sides do agree on, however, is that if Biden were to forgive student loans with an executive order, it would invite years of litigation.