Elizabeth Warren wants Joe Biden to cancel student loans.
Here’s what you need to know.
Sen. Elizabeth Warren (D-MA) tweeted today that President Elect Joe Biden and Vice President Elect Kamal Harris can cancel “billions of dollars of student loan debt.” According to Warren’s tweet, student loan forgiveness would be the most effective option for an economic stimulus:
“1. Biden-Harris can cancel billions of dollars in student loan debt, giving tens of millions of Americans an immediate financial boost and helping to close the racial wealth gap. This is the single most effective executive action available for massive economic stimulus.”
Cancel student loans
- Warren, and Sen. Bernie Sanders (I-VT) championed student loan forgiveness on the presidential campaign trail. Sanders advocated for a full cancellation of student loan debt.
- For example, Sanders proposed that the federal government forgive all $1.6 trillion of student loans, including both private and federal student loans. Warren proposed student loan forgiveness for 95% of Americans and would have capped student loan forgiveness based on income.
- Both Sanders and Warren also support continuation of the Public Service Loan Forgiveness program—a federal program that forgives federal student loans for borrowers who work full-time for a qualified non-profit or public service employer.
- In contrast, President Donald Trump and U.S. Secretary of Education Betsy DeVos support ending the Public Service Loan Forgiveness program.
- Trump and DeVos support student loan forgiveness through income-driven repayment plans, which are available for borrowers to repay federal student loans. However, they do not support a separate student loan forgiveness plan only for public servants.
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Forgive student loans through executive action?
There are several potential ways for Biden to cancel student loans. Warren also believes that a president, without Congress, can forgive student loans through executive action. Specifically, Warren has said that the Higher Education Act empowers the U.S. Secretary of Education to forgive student loans without further congressional authorization. Legal scholars don’t universally accept this position, however. Traditionally, under the U.S. Constitution, only Congress has the power to cancel student loan debt. Sen. Elizabeth Warren (D-MA) and Sen. Chuck Schumer (D-NY) introduced a resolution in Congress that would, in the wake of the Covid-19 pandemic, enable Trump to forgive up to $50,000 of student loans. Specifically, the resolution would:
- cancel federal student loans, not private student loans.
- If not forgiven, Warren and Schumer say that student loan debt will continue to increase inequity and income disparity.
- This proposal to cancel student loans also could provide economic stimulus.
Currently, this is only a proposal and not law. Congress would need to approve Warren and Schumer’s proposal for Biden to act on student loan forgiveness.
Warren, who helped build the Consumer Financial Protection Bureau and is a potential candidate for Biden’s Treasury Secretary, has long championed student loan forgiveness. As a presidential candidate, Biden called for student loan forgiveness. However, his call for outright student loan forgiveness was limited to $10,000 for student loan borrowers who are impacted by Covid-19. This is different than other proposals that have called to cancel student loans for all borrowers, and in some cases, without limitations.
The composition of the U.S. Senate, which is still not clear, may determine whether her latest proposal to cancel student loans becomes law. If Republicans retain control of the U.S. Senate, the Warren-Schumer proposal likely will not pass. Biden could cancel student loans as part of a broader stimulus package from Congress, although there is no guarantee that student loans will be included. If the economy improves, Senate Republicans be less likely to approve more federal spending due to Covid-19. Further, it’s unclear if there is any student loan forgiveness, who exactly would qualify. For example, Congress or Biden could limit student loan forgiveness by income or whether a borrower has been directly impacted by Covid-19.
Pay off student loans
Whether Congress or Biden acts to cancel student loans, it’s unclear how and when it might take shape. In the interim, get prepared and develop a student loan game plan. Here are good places to start to pay off student loans, all of which have no fees: