Biden, Congress and student loan forgiveness: What is the federal government doing to address the issue?
WASHINGTON – For millions of Americans, Sept. 30 marks the end of nearly a year-and-a-half of relief on student loan payments — unless the government extends it, or tackles the issue at hand.
Now, as the deadline approaches, Democrats are not only calling on the White House to extend the forgiveness once again, but to take lasting action toward forgiving student loans, which reached record high numbers in 2020.
Politicians in both parties, in Congress and the White House, acknowledge the debt and its affects. But that's where the unity ends.
Democrats want President Joe Biden to do it through an executive order, with progressives within the party pushing to forgive $50,000 for borrowers. Biden himself campaigned on undoing $10,000. Republicans are pushing against forgiveness and instead advocating for more transparency within the system.
The relief toward payments and interest started in March 2020 under the previous administration, spurred by the coronavirus pandemic ravaging the U.S. economy.
As a candidate, Biden campaigned on issuing relief toward the skyrocketing loans many people say hold them down financially.
However, six months into his presidency, Biden has delivered relief to only a select group of borrowers using executive orders, leaving millions of Americans wondering: Will relief come for them, too?
Nearly 44 million Americans owe about $1.7 trillion in student loans, according to Federal Reserve data. The average 2019 graduate of a private or public college holds an average of $28,950 in debt, according to the Institute for College Access and Success.
The figure has more than doubled since 2008 and is the second largest source of household debt, trailing only mortgage debt, according to the nonpartisan Peter G. Peterson Foundation.
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Here is what Congress has done — and wants done — on the issue, what the White House has achieved so far:
Biden 'has the power': Democrats push issue to White House's court
Democrats have remained clear in their message: Biden has the power to forgive student loans through executive order.
That's part of the reason they didn't include student loan relief in a $3.5 trillion budget bill filled with other Democratic aims like expanding Medicare and fighting climate change – legislation Democrats say they can pass without Republican support using a legislative maneuver called reconciliation.
That pushes student loans to Biden's court, since enacting student loan forgiveness through separate legislation will be difficult in an evenly split Senate. Largely, Republicans do not want broad forgiveness of student loans.
Sen. Elizabeth Warren, D-Mass., a member of the Committee on Finance, told USA TODAY that senators who helped craft the legislation did not include student loan relief because "we don't need to. The president has the power to deal with student loans on his own."
Even Senate Majority Leader Chuck Schumer, D-N.Y., has insisted Biden has the power to cancel student debt without Congress: “All you need is the flick of a pen."
But the question over how much Biden can sign away – or if he has the power to do so – is up for debate.
Liberal activists and lawmakers have remained persistent in urging the president to cancel some student loan debt.
"I don't understand what that hesitation is," Rep. Ro Khanna, D-Calif., told USA TODAY.
During the election, Biden campaigned on supporting $10,000 in student loan forgiveness. He has also argued any cancellation should be aimed toward lower-income borrowers.
He said earlier this year he did not believe he has the authority to forgive student loans by executive order. But he asked the Justice and Education departments later to explore the president’s authority to do so. .
Neither department has released its memo.
An administration official told USA TODAY "Biden continues to look into what debt relief actions can be taken administratively" and said the Education and Justice departments are working with the White House "to review options with respect to debt cancellation."
Decades-old law gives Biden the power, progressives say
Legal experts largely disagree whether Biden can forgive large sums of student loans – especially on private loans.
Progressives argue that under the Higher Education Act of 1965, the secretary of education can forgive this debt. The act says the secretary can "enforce, pay, compromise, waive, or release any right" to collect on federal loans.
But, it is unclear whether that includes widespread debt forgiveness to the extent progressives like Warren and Khanna want to deliver.
The Department of Education said in a legal opinion memo under the Trump administration and former Secretary of Education Betsy DeVos that the president does not have that kind of power under the Higher Education Act.
"I understand that he's exploring this issue, but I hope that the departments move with some speed," Sen. Tina Smith, D-Minn., said of Biden and the Justice and Education departments. "In the meantime there are millions of Americans that are wondering what's going to happen, and are making financial decisions right now."
Persis Yu, director of the National Consumer Law Center's Student Loan Borrower Assistance Project, told USA TODAY the authority under the Higher Education Act "has already been used to provide widespread relief to borrowers during the pandemic" and they "believe that it naturally follows that President Biden can use the authority to provide widespread administrative debt cancellation."
"Widespread cancellation is urgently needed to get both student loan borrowers back on track after the pandemic, but also the student loan system as a whole," she said.
The department recently hired a general counsel Toby Merrill, whose research is often cited by Warren and progressives who say the president can legally cancel $50,000 in student debt. Merrill has specifically cited the Higher Education Act, saying Congress gave the education secretary the authority to cancel debt.
Yu said she couldn't "speculate on what will ultimately influence the decision" but said Merrill has "reached the conclusion that administrative debt cancellation is legal."
"I think the answer is clear," Warren told USA TODAY. "I know that the president can cancel student loan debt, and the way I know is because President Obama did it. President Trump did it, and President Biden has done it every month since he took the oath of office."
So, what have Biden and Congress done so far?
Biden has forgiven about $1.5 billion in student loan debt for about 92,000 borrowers, according to the Education Department.
The administration has only canceled loans for victims of for-profit college fraud so far.
Earlier this month, it forgave $55.6 million in debt for 1,800 students who attended Westwood College, Marinello Schools of Beauty and the Court Reporting Institute.
In addition, the American Rescue Plan passed by Congress and signed by Biden in March made all coronavirus student loan forgiveness from Jan. 1, 2021, until December 31, 2025, tax-free.
Democrats call on Biden to pause payments in the meantime
Democrats in Congress are calling on Biden to extend the relief on loan payments and interest.
Last week, Warren, along with Sen. Ed Markey, D-Mass., penned a letter to Biden arguing the current pause on payments and interest should be extended “until at least March 31, 2022.”
When asked why they were seeking such a long extension when the economy has started to rebound, Markey told USA TODAY it is because "these young people have had to whether a COVID-induced recession, so their own personal revenues, their own ability to be able to pay for rent or food and student loans has all been negatively impacted by pandemic."
The Massachusetts senators, along with Smith, sent letters in June to the CEOs of all federal student loan servicers, asking for information about how the companies will transition millions of borrowers back into repayments once the moratorium ends.
"The responses to our inquiry indicate that neither student loan borrowers nor student loan servicers are prepared for payments to resume, and servicers will need significant time to ensure that staffing and procedures are ready to provide borrowers with a high level of support,” the letter reads.
The new letters follow a larger call in June when 60 Democratic lawmakers called on Biden to extend a pause on student loan payments and interest so as not to “drag down the pace” of the country’s recovery from the COVID-19 pandemic.
Smith, who is a member of the Education Committee, told USA TODAY that the "loan servicing system isn't primed to turn back on." She continued that it is a "fallacy to assume that most of these borrowers even know what's going on, let alone kind of what their obligations are."
Schumer reupped this call on Tuesday, saying from the Senate floor he was calling upon Biden to extend the relief until "next spring."
"Of the many steps the government has taken to respond to the COVID crisis, this has been one of the most effective," he said.
Republicans want transparency on loans
Generally, congressional Republicans haven't supported widespread relief toward student loans but still acknowledge the crisis facing students and borrowers.
Instead, they wish to see the system reformed, and more transparency in the loan process.
Sen. Mike Braun, R-Ind., a member of the Education Committee, told USA TODAY they have "to be careful with" forgiving loans "because of the precedent it sets."
"I'm more interested in lowering the cost of higher education," he continued, but called the task of reforming the system a "heavy lift."
Sen. Richard Burr, R-N.C., the top Republican on the Education Committee, told USA TODAY he'd like to see the administration "engage and act" on legislation he and Sen. Angus King, I-Maine, introduced. Their legislation would aim to simplify current repayment programs.
Other legislation introduced by Republicans would aim to increase transparency for students taking out loans.
Three bipartisan bills, introduced by Smith, and Iowa Republican Sens. Chuck Grassley and Joni Ernst, would inform students about the costs of college from the beginning to the end of the process.
Ernst told USA TODAY she thinks "it's really smart kids and young adults know what the return on their investment is going to be. So yes, I do think that needs to be part of an overall plan."
"Transparency is really important: People need to know and understand what their money is paying for and how it's going to be paid off," Ernst said.
'We have to do more'
Progressives have remained consistent in their call for the president to relieve $50,000 per individual in debt.
The debt "is stopping them from buying that car or buying that house," Smith said.
But, beyond the forgiveness for those who attended fraudulent colleges or programs and exploring undoing $10,000 per borrower, Biden has so far shot down progressives' dreams of more forgiveness.
In a February CNN town hall, Biden said, “I will not make that happen,” when asked about the idea of $50,000 in forgiveness per student.
Similarly, in a May interview with The New York Times, Biden said, “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.”
However, a progressive source told USA TODAY they have been talking to those in the administration about more widespread relief, and those meetings have been met warmly, though they have not been told about any movements on the issue.
Beyond seeking an extension towards interest and forgiveness, Markey agreed "we have to do more. I think the times call for it."
"It interferes with their ability to fully contribute to our economy, which is what we're going to need over the next several years to completely recover from pandemic-induced recession," he said.
Contributing: Sarah Elbeshbishi, Chris Quintana, Jeanine Santucci, McKenzie Sadeghi, USA TODAY