Despite headlines and Twitter threads to the contrary, Joe Biden can’t forgive $50,000 of student loans through an executive order.
Here’s what you need to know.
The hashtag #cancelstudentloans has trended on Twitter over the past day, as students, student loan borrowers and education advocates hope that President-Elect Joe Biden can help alleviate the burden of student loan debt. Today, according to the latest student loan debt statistics, 45 million borrowers collectively owe more than $1.6 trillion of student loans.
Amid the excitement to cancel student loans, there has been some confusion about comments attributed to Senate Minority Leader Chuck Schumer (D-NY) regarding the president’s ability to cancel student loans. Specifically, some have claimed that Schumer said that Biden can cancel $50,000 of student loans through an executive order. This led to a flurry of excitement on social media about when student loans will be cancelled and whether Biden would use this supposed presidential power.
However, despite what you may have read, this is not true. The president currently does not have the authority to cancel $50,000 of student loans through an executive order. Let’s clear up any confusion.
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Proposal: Cancel student loans
Schumer and Sen. Elizabeth Warren (D-MA) have proposed a resolution in Congress that would enable the president to forgive up to $50,000 of student loans through executive action. Importantly, this is only a proposal. It’s not law. A resolution is the collective sentiment of senators, but is considered non-binding law. Therefore, Biden does not yet have congressional authority to cancel $50,000 of student loans.
Here’s the proposal:
- Federal student loans: The resolution calls to cancel federal student loan debt, not private student loan debt.
- Higher Education Act: According to the resolution, the Higher Education Act provides legal authority for the U.S. Secretary of Education to cancel student loans debt. However, some legal scholars believe that only Congress has the power to cancel student loan debt.
- Student loan forgiveness: Currently, some forms of student loan forgiveness result in income tax on the amount of student loans forgiven. This resolution calls for any student loan forgiveness to be tax-free.
- Timeline: There is no timeline for the president to cancel student loans.
- Pause student loans: According to the resolution, the president should pause federal student loan payments and interest accrual for the duration of the Covid-19 pandemic. Currently, this student loan relief expires December 31, 2020.
Warren and Schumer say that if the president cancels student loans, it would provide necessary economic stimulus. If not forgiven, Schumer and Warren believe that student loans will continue to increase inequity and income disparity, among other social issues, for student loan borrowers.
Cancel Student Loans
Will Biden cancel student loans? The bottom line is that there are several proposals in Congress for student loan forgiveness. To date, Congress has not passed any of these proposals, including the resolution to cancel $50,000 of student loans. The composition of the U.S. Senate could impact the future of student loans, including calls to cancel student loans. Currently, Senate Republicans control the Senate, although the run-off Senate elections in Georgia could impact the balance of power. If Democrats win the Senate, Schumer and Warren would have a clearer path to push forward their proposal. If Congress grants the president such authority, there is no guarantee that Biden would cancel student loans, let alone up to $50,000 of student loan debt for each borrower. Biden has said he supports up to $10,000 of student loan forgiveness. If Republicans maintain control of the Senate, this proposal will remain just that—a proposal.
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