Democratic Party Civil War Over Student Debt Forgiveness Hurts Millions of Borrowers

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  • A Civil War Within the Democratic Party Over Cancellation student debt has brought borrowers to a standstill.
  • Biden and Pelosi have said that the authority to waive student debt lies with Congress, not the president.
  • Sens. Warren and Schumer claim Biden has the authority and have called on him to exercise it.

Many student loan borrowers are currently stuck in limbo, thanks to a growing civil war within the Democratic Party.

By the end of September, they will have to pay off their federal student loans again after being granted 18 months of deferred payment and not accruing interest. The break has helped millions of borrowers stay afloat financially during the pandemic, but the imminent rise, coupled with rising interest, comes at a time when the highly contagious Delta variant in the US is prevailing in the country’s third wave of coronavirus.
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Borrowers have crossed their fingers that their debt, or some of it, would be wiped out by the fall. But with two months until payments start again, it seems increasingly likely that widespread student loan waivers won’t happen anytime soon.

President Joe Biden campaigned to support $10,000 in student debt forgiveness per person, but since becoming president, he has no clear timeline for doing so. He has not included cancellation in his stimulus plan, infrastructure plan or his budget, and has resisted calls from Democratic lawmakers to cancel up to $50,000 per person using his executive powers.

Biden has said that the authority to waive student debt lies with Congress, not the president. But his Democratic colleagues, including people like Sens. Elizabeth Warren and Chuck Schumer, have argued that Biden can use his executive powers to do it. The discrepancy has led to a growing divide among Democrats, leaving borrowers confused and frustrated.

Biden says he doesn’t have the authority to clear student debt

Early in his term, Biden early the Departments of Education and Justice to review its legal authority to waive $50,000 in student debt per borrower by executive order. But in February, Biden had… a plan effectively rejected proposed by Warren and Schumer to wipe out $50,000 in student loans per borrower.

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“I won’t let that happen,” he had told a CNN audience at City Hall, adding that he believed loan forgiveness depends on whether borrowers attended a private or public university. “I’m willing to write off $10,000 in debt, but not $50. I don’t think I have the authority to do it.”

He told The Washington Post that it’s “disputable” that the president can use executive power to cancel student debt, and it’s unlikely he will.

Democratic Party Civil War Over Student Debt Forgiveness Hurts Millions of Borrowers
President Biden has said he does not have the authority to waive student debt.
Photo by Jim Watson/AFP via Getty Images

Read more: Biden has assessed the legality of canceling $50,000 in student debt for millions of Americans. After several months there is still no word.

In April, Biden also asked Education Secretary Miguel Cardona to: make a memo about the president’s legal authority to waive $50,000 in student loans per person, White House Chief of Staff Ron Klain told Politico. Klain said Biden will “look at that legal authority”.

But six months later, the White House is still assessing the legality of Biden’s ability to forgive student debt. When Insider contacted for comment Last month’s memos were neither responded to by the Department of Education, the Department of Justice or the White House.

House speaker Nancy Pelosic recently backed Biden‘s position that he does not have the authority to waive student loans. She told reporters at a news conference that student debt was “a policy discussion” and that cancellation had to be “an act of Congress.”

“People think the president of the United States has the power to cancel debt. He doesn’t,” Pelosi said. “He can delay, he can postpone, but he doesn’t have that power.”

Others say Biden just needs to tap his pen

However, Warren and Schumer have strongly opposed Biden and Pelosi’s claims that the president does not have the authority to clear student debt. Since Biden took office, they have remained adamant that the Higher Education Act would enable him to do so.

The two senators are calling for student loan forgiveness as a critical step to help close the racial wealth gap and economy, urges Biden to act as quickly as possible, even before the results of the assessments are released.

“There’s very little the president could do with a tap of a pen that would boost our economy more than cancel $50,000 in student debt,” Schumer said. told reporters in February when Biden rejected the $50,000 proposal. “This is one of those things the president can do alone.”

warren previously pointed out Insider to a letter from Harvard Law School’s Legal Services Center, detailing the Education Secretary’s legal ability to waive student debt.

Democratic Party Civil War Over Student Debt Forgiveness Hurts Millions of Borrowers
sen. Elizabeth Warren has criticized Biden for failing to cancel student debt, saying he doesn’t need Congress to act.
GREG NASH/POOL/AFP via Getty Images

read more: Millennials are about to be screwed again if Biden doesn’t cancel student loan

“President Biden can cancel $50,000 in student loans at the stroke of a pen,” Warren told Insider in June. “He doesn’t need Congress to act, he can do it alone, and I hope he will.”

Warren and Schumer both their demands raised again in a press event last month, arguing that student debt relief would help close the racial wealth gap and boost the economy. Schumer said: that all Biden needs to do to make America happier and more prosperous is “tap his pen.”

Warren likened student debt to a sword hanging over borrowers’ heads. “Every day that goes by, that sword gets a little closer,” she said. “The President of the United States can remove this sword. The President can prevent this pain.”

Rep. Alexandria Ocasio-Cortez has joined the opposition, calling on Biden to use his powers. “The case against student loan forgiveness looks shaky by the day,” she tweeted earlier this year. “We have the Senate Majority Leader on board to pardon $50k. Biden is holding back, but many of the arguments against it just don’t hold up on closer inspection.”

A Civil War Leaves Borrowers Hanging

In the great debate over student debt forgiveness, Biden and Pelosi versus Warren and Schumer represent two growing factions within the Democratic Party. Even experts disagree about who has power.

Mark Kantrowitz, a student loan expert who has published bestselling books on the subject, previously told Insider that if the departments actually carry out these assessments, they will find that Biden “does not have that authority” under the Higher Education Act. But Seth Frotman, executive director of the Student Borrower Protection Center, which protects borrowers’ rights, also told Insider that a simple reading of the Higher Education Act makes it clear that the education secretary can cancel debts.

The ensuing civil war over who exactly has the power to clear student debt — and how to do it — has brought millions of borrowers to a standstill.

To be sure, Biden has taken steps toward improving America’s $1.7 trillion student debt problem.

He extended the payment break from January to September; a regulatory agenda released in June, it plans to improve student loan forgiveness programs by 2022; and, through the Department of Education, cleared billions of dollars in debt for borrowers who had been defrauded by for-profit schools and borrowers with disabilities.

But, like Insider’s Ayelet Sheffey reported, all of which left trillions of outstanding debt. So far, $2.3 billion in student debt has been forgiven — only 0.2% of student loans swim through the system.

The clock is ticking for both the legal review and the return to borrowers paying their debt. The split within the Democratic party gives little indication that their debts will be wiped out before the countdown ends.

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