In a major victory for student borrowers, President Joe Biden announced on Thursday that he is canceling an additional $9 billion in student loan debt for more than 500,000 Americans. This is the largest amount of student debt relief ever granted by a president, and it comes on top of the $5.8 billion that Biden has already forgiven since taking office.
The latest round of debt cancellation targets borrowers who were defrauded by for-profit colleges, as well as borrowers with disabilities who are unable to work. According to the Department of Education, these borrowers have faced “extraordinary burdens” due to their student loans, and many of them have been struggling for years to get relief from the previous administration.
“Today’s action is part of my commitment to deliver on my promise to make education more affordable and accessible for all Americans,” Biden said in a statement. “I will not rest until we have reformed the student loan system to ensure that borrowers are treated fairly and with dignity.”
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The announcement was welcomed by advocates and lawmakers who have been pushing for more aggressive action on student debt, which has ballooned to $1.7 trillion and affects 45 million Americans. They argue that student debt is a drag on the economy and a barrier to social mobility, especially for low-income and minority borrowers.
“President Biden is showing that he hears the voices of the millions of Americans who are trapped in student debt,” said Senator Elizabeth Warren, who has been leading the charge for debt cancellation in Congress. “This is a huge step forward, but we still have more work to do. We need to cancel $50,000 in student debt for every borrower, and we need to do it now.”
There are different opinions and legal challenges on whether President Biden can cancel student loan debt. Here are some facts and arguments from the web search results that might help you understand the issue better: President Biden has promised to cancel up to $20,000 in student loan debt for low- and middle-income borrowers, but his plan was struck down by the Supreme Court in June 2023.
The Supreme Court ruled that the president does not have the authority to cancel student loan debt without congressional approval, as it would violate the separation of powers and the contracts clause of the Constitution. The Biden administration has said it is pursuing an alternative path to debt relief through negotiated rulemaking under the Higher Education Act, which allows the Department of Education to issue regulations on federal student aid programs.
The Department of Education has announced a negotiating committee and an issue paper to guide the first negotiating session, which is expected to start in November 2023. The committee will include representatives from various stakeholders, such as students, borrowers, institutions, consumer advocates, and state officials. The Biden administration has also used its existing authority to cancel student loan debt for certain groups of borrowers who qualify for relief under existing programs, such as Public Service Loan Forgiveness, income-driven repayment, and total and permanent disability discharge.
The White House announced on October 4, 2023, that it has approved an additional $9 billion in debt relief for 125,000 borrowers through these programs, bringing the total approved debt cancellation to $127 billion for nearly 3.6 million borrowers so far. However, some critics have argued that these actions are not enough to address the student debt crisis, which affects around 43 million Americans who owe more than $1.7 trillion in federal student loans.
Some advocates and lawmakers have urged President Biden to use his executive power to cancel up to $50,000 in student loan debt for all borrowers, citing a legal opinion from Harvard Law School’s Project on Predatory Student Lending that supports this view. They have also claimed that canceling student loan debt would benefit the economy, reduce racial and gender disparities, and boost the Democrats’ chances of retaining their majorities in Congress in the 2024 midterm elections. However, some opponents have argued that canceling student loan debt would be unfair to taxpayers, borrowers who have already paid off their loans, and those who did not go to college.
They have also questioned the economic and social benefits of canceling student loan debt, saying it would mostly help high-income earners who have more debt but also more earning potential. They have also suggested that canceling student loan debt would not address the root causes of the rising cost of higher education and the lack of accountability for predatory institutions and lenders.
While Biden has expressed support for canceling up to $10,000 in student debt per borrower, he has not endorsed the $50,000 proposal, and he has said that he prefers Congress to pass legislation rather than using his executive authority. However, some legal experts and activists contend that Biden has the power to cancel student debt unilaterally, and they have been urging him to do so without delay.
“President Biden has shown that he can cancel billions of dollars in student debt with the stroke of a pen,” said Randi Weingarten, the president of the American Federation of Teachers. “He should use that same authority to deliver on his promise to cancel $10,000 in student debt for every borrower as a down payment on the larger debt crisis. We can’t wait for Congress to act when we have a solution at our fingertips.”
Biden’s announcement comes as the clock is ticking on the federal student loan payment pause, which is set to expire on January 31. The pause, which was implemented by former President Donald Trump in March 2020 and extended by Biden until 2022, has provided relief to millions of borrowers who have been able to suspend their monthly payments and interest accrual during the pandemic. However, many borrowers are worried about resuming their payments amid ongoing economic uncertainty and hardship.
The Department of Education said that it is working to ensure a smooth transition back to repayment for borrowers, and that it will provide more guidance and support in the coming weeks. The department also said that it will continue to review its authority and options for further debt cancellation, and that it will take additional actions as appropriate.
“We know that student debt can be a heavy burden for many borrowers, especially in these unprecedented times,” said Education Secretary Miguel Cardona. “That’s why we are taking historic steps to provide relief and support to those who need it most. We will not stop until we have fixed our broken student loan system and put students first.”