It was once an idea so far on the fringe that no major politician endorsed it. Then it was the pipe dream of far-left progressives. Now a push for President-elect Joe Biden’s administration to single-handedly cancel billions of dollars in student debt has taken hold in increasingly large segments of the Democratic Party, raising a real possibility, for the first time, that broad swaths of Americans may see some of their student loan debt wiped away.
The idea that Biden should wipe out student debt through executive action has exploded online in recent weeks as Democrats confront the real possibility that they may not control the Senate in January, dramatically limiting Biden’s ability to get substantive legislation — like has said he supports forgiving $10,000 in student loans for all Americans, the kind of step that was itself unthinkable several years ago. And if passing a large pandemic relief bill in Congress becomes impossible, Biden is likely to face significant pressure to use other means to get Americans that forgiveness.
That pressure will be especially acute if the temporary pause on payments that the CARES Act implemented at the beginning of the pandemic ends in January, which it will without further action from Congress.
Sen. Elizabeth Warren has led the argument that it is within the president’s power to cancel federal student loan debt, since the executive branch — through the Education Department — originates and oversees student loans. She has been joined by Senate Democratic Leader Chuck Schumer, who is more moderate than Warren. Both hold substantial power in the Senate and sway in the party.
Together, they have called for the government to cancel $50,000 in student loan debt for each American — a significant chunk of money that would still limit forgiveness for doctors, lawyers, and others with larger student loan balances.
Warren’s involvement matters not just because she is a prominent voice, but because she has a long track record of expected pick for treasury secretary, sits on the board of the Committee for a Responsible Federal Budget.
But Biden has also signaled a desire to work with progressives like Warren. And many Democrats have argued for student debt forgiveness as an imperfect way to deal with congressional gridlock.
“It’s important context to think about this in comparison to other policies you can execute via executive order,” said Bharat Ramamurti, who was the lead economic advisor on Warren’s presidential campaign and is currently a member of the Congressional Oversight Commission.
“You’re doing something concretely that will help a significant portion of adults in the US,” he said. “It’s hard to do that with other policy options.”
Tens of millions of Americans would immediately feel the effects of not having to send student loan checks to the government every month, Ramamurti said. And he argued that research on people whose student loans have been canceled shows there would be “ripple effects” on the economy that would go beyond what an economic analysis like the CFRB’s can measure: “If you take this debt off of people’s books, it affects the decisions they make.”
Republicans have already sought to paint student debt forgiveness as a giveaway to elites: By definition, student loan forgiveness would exclude tens of millions of Americans who never attended college.
But proponents of the policy point to the 36 million Americans who have student debt despite not ever receiving a college degree. And they have called it a matter of racial justice: Black Americans disproportionately hold more student debt and struggle to pay it off.
Toby Merrill, the director of Harvard Law School’s Project on Predatory Student Lending, was among the first to argue that student debt could be canceled through executive order, without congressional approval.
She said she doesn’t know whether Biden’s transition team is seriously considering the policy.
“But I would say that anyone coming in and looking at this economy, looking at all of our shared concerns around racial and economic injustice, looking at the enormous burden that student loans are placing on people, and the burden they’re placing on Black communities in particular — they would have to look at debt forgiveness.”