Stymied by Congress, the president could make $1 trillion in student loans disappear all by himself.
As Senator Elizabeth Warren sees it, President Joe Biden can solve a lot of problems—for millions of Americans financially, and for himself politically—with a single move that neither Senator Joe Manchin nor any Republican in Congress could veto. The president, she says, should unilaterally wipe out up to $50,000 in student-loan debt for every federal borrower in the country.
Warren has been beating this drum for just about two years, ever since she unveiled the proposal in a bid to outflank her rivals—including Biden—in the 2020 Democratic presidential primary. The senator from Massachusetts has won influential converts to her cause over the past year, most notably Senate Majority Leader Chuck Schumer. But Biden is not one of them. “I will not make that happen,” he bluntly told a questioner asking about the proposal at a town hall a few weeks after he took office.
The president’s political fortunes are very different now than they were then. His ambitious social-spending agenda, already chopped in half, has stalled in the Senate. Biden’s approval ratings have fallen to the low 40s, and with the pandemic raging and Congress bickering, his window for mounting a comeback in time to save his party’s majorities in the midterm elections is shrinking. In Biden’s struggles, progressives like Warren see an opportunity to make a fresh case for action that would prove popular with voters whom Democrats need to turn out this fall.
“I believe the president should cancel student-loan debt because it is the right thing to do for people who have debt and the right thing to do in our economy,” Warren told me by phone last week, having recovered from a mild December bout (“a day and a half of the flu and I was done,” as she described it) of COVID-19. “But,” she added, “even someone who disagreed with me should take a very serious look at the polling data right now.”
Since the spring, Biden has lost some support on the left and even more among independents, but no group of Americans has soured faster on the president than younger voters, according to a recent analysis of polling data by The Economist. That same cohort—Gen Zers and Millennials—is where support for student-debt forgiveness is strongest, surveys have also shown. “One of the hardest things for an elected official to do is demonstrate to people that they can count on that elected official to be on their side,” Warren said. “Canceling student-loan debt for more than 40 million Americans would persuade a lot of young people that this president is in the fight for them.”
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Borrowers have not had to make student-loan payments for nearly two years because of the pandemic, thanks to a pause first enacted by Congress in the 2020 CARES Act and then extended multiple times, first by President Donald Trump and then by Biden. But the scale of what Warren and other progressives are proposing is something else entirely: Blanket, permanent loan forgiveness would alter the long-term finances of individual Americans more directly than any other single unilateral action by a president. The estimated $1.7 trillion in total outstanding student-loan debt is roughly the cost of the Build Back Better Act that Biden is trying to push through Congress. Canceling up to $50,000 per borrower would wipe away about $1 trillion of that debt. If left untouched by the courts, the president’s action would, at the expense of ballooning federal deficits, eliminate entirely and forever the student loans that 80 percent of the nation’s borrowers currently owe to the government.
To its backers, mass debt forgiveness is almost a no-brainer. Many see it as both a bold political stroke and a needed moral corrective that would free more than 40 million middle- and working-class Americans from burdens imposed by rapacious lenders during their first moments of adulthood. “We were preyed upon,” Representative Jamaal Bowman told me. “We didn’t know any better. We weren’t aware of how it all worked.” Bowman, 45, is a former schoolteacher and principal now serving his first House term, representing parts of the Bronx and Westchester County in New York. He told me that he and his wife together have more than $100,000 in outstanding debt. “That number is so high, I’m embarrassed to say it aloud,” Bowman said.
Advocates for the proposal have also cast debt cancellation as a way to close the racial wealth gap, because Black borrowers are more likely to struggle repaying loans. “It’s an economic-justice issue. It is a racial-justice issue. It is an intergenerational issue,” Representative Ayanna Pressley of Massachusetts told me. Although student debt is frequently associated with young people, many borrowers carry it to middle age and beyond, or struggle to repay loans they took out on behalf of their children or grandchildren. Pressley cited statistics showing that women carry two-thirds of all student debt and that Black women carry 20 percent more than their white peers. “Coming out of the reckoning on racial injustice, which I hope we’re still very much in, the only receipts that matter are budgets and policies. This is an opportunity to actualize racial justice with the stroke of a pen.”
Some economists say, however, that advocates are overstating the progressiveness of a blanket forgiveness, which would end up benefiting doctors, lawyers, and many others who have or are likely to get high-earning jobs and won’t need help paying off their loans. Spending $1 trillion from the federal Treasury exclusively on people who went to—and in most cases graduated from—college essentially punishes Americans who didn’t go to college and, because of that fact, are more likely to need government help, says Sandy Baum, a nonresident senior fellow at the Urban Institute. “It’s just hard to see how that is progressive,” Baum told me. “It can’t mean taking people who have a certain privilege and who are likely to be in the top half of the income distribution and give them a gift that we’re not giving to people who have greater stress.”
Although polls have shown strong support for some debt forgiveness, it’s less clear how voters would respond to such a broad cancellation—especially those who paid full freight for college costs or who have already repaid expensive loans. Warren got a well-publicized taste of the potential for backlash on the campaign trail when a father who said he had paid his daughter’s entire tuition and would be “screwed” by the policy asked, “Can I have my money back?”
Those concerns may be weighing on the president, who back in February suggested that $50,000 was too generous an amount to forgive and questioned whether he had the legal authority to do so on his own. Both Biden and Barack Obama have referenced their own experiences with student debt. Biden said while campaigning in 2019 that at one time he had more than $280,000 in student-loan debt after putting his kids through college and graduate school. Obama frequently told audiences that he and his wife, Michelle, did not pay off their law-school loans until 2004, the year he won election to the Senate.
The White House has said that Biden would sign legislation from Congress canceling up to $10,000 in student debt per borrower, in keeping with a proposal Biden endorsed as a candidate. The administration has also taken more limited steps to wipe out debt for disabled borrowers and victims of fraud by for-profit colleges.
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Advocates have, until recently, been frustrated by the administration’s response to their push for more aggressive action on student debt. A virtual meeting that administration officials held with several advocacy groups last month “did not go well at all,” according to one attendee who spoke on the condition of anonymity to describe a private conversation. The administration was planning to end the repayment pause on February 1 despite worries from advocates and senior Democrats that amid inflation concerns and the resurgent pandemic, forcing millions of people to restart loan payments would be a disaster both economically and politically. In the meeting, the participant said, Biden officials downplayed the pandemic and characterized the economy as strong in explaining their rationale. Days later, however, the administration reversed course, and Biden announced an extension of the repayment pause for another three months, until May 1. In his statement, he gave no indication of whether a permanent forgiveness was under consideration, urging borrowers to use the extra time to “prepare for payments to resume.”
Officially, the administration has tasked the Departments of Justice and Education with reviewing the legality of canceling debt by executive action. “The president supports Congress providing $10,000 in debt relief,” a White House spokesperson told me, “and he continues to look into what debt-relief actions can be taken administratively.”
To Warren, the legal case is open-and-shut.
“There is no legal obstacle,” she told me, arguing that Biden can use the same statutory authority for a mass forgiveness that he and other recent presidents have used to cancel debt for some subgroups of people. “Do you know how I know that the president can cancel student-loan debt? Because President Obama did it, President Trump did it, and President Biden has already done it.” (Not everyone agrees that Warren, a former Harvard Law professor, is on such solid ground. “I’ve only seen legal analysis from Elizabeth Warren students,” Adam Looney, an economist at the University of Utah and a former deputy assistant Treasury secretary in the Obama administration, told me. “The legal issues are actually much more complicated.” House Speaker Nancy Pelosi has also disputed the legality of permanent student-loan forgiveness without congressional approval.)
Some cancellation advocates who have been in touch with the administration believe that what’s holding Biden back from a more aggressive move is timing, not legal concerns. For the past several months, the president’s top economic priority was winning passage of his Build Back Better plan, and announcing such a costly end run around Congress could have alienated Democrats, like Manchin, whose votes he needed for that legislation. But now that Manchin has, at least for now, torpedoed that dream, Biden is even more desperate to deliver tangible help to voters ahead of the midterms, and potentially has less to lose on Capitol Hill. One Democratic aide suggested that the White House could be holding back a move on student-loan forgiveness as a “break glass in case of emergency” option later in the year if negotiations over his legislative agenda fail irreparably.
The progressives hoping to change Biden’s mind on student debt now see May 1 as their deadline, too, believing that the best time to permanently forgive loans is before millions of people must begin paying them again. I asked Warren what she had heard from the president, and whether she believed her year-long push would ultimately succeed. She told me she wouldn’t discuss her private conversations, then offered a somewhat more cryptic response. “There are a lot of options still under consideration,” she said, before reiterating her support for canceling $50,000 in debt for every borrower. “It is the right thing to do, and I feel confident the Biden administration will come to that conclusion.”
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