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There
is an easy option available to President-elect Joe Biden to ease the
economic suffering of Americans on the first day he takes office, and
that is to cancel outstanding federal government student loans.
Senator Elizabeth Warren made
the case
during a recent Senate Banking Committee hearing, saying
that, “All on his own, President-elect Biden will have the
ability to administratively cancel billions of dollars in student
loan debt using the authority that Congress has already given to the
Secretary of Education.” She added, “This is the single
most effective economic stimulus that is available through executive
action.”
She’s
right. About 45
million Americans
have a whopping $1.6
trillion
of student loan debts, and a significant number have made no progress
in paying them off. After home mortgages, student loans are the
second most common debt in the United States. There is no mystery as
to why this is the case. While the cost of higher education has
risen, wages have simply not kept up, and debt has slowly ballooned.
The burden of debt repayment has held people back from buying homes,
moving out of their parents’ homes, having children, pursuing
further education, starting businesses, and more. In other words, it
has dragged down lives and the economy.
Senator
Warren asked
Federal Reserve Chair Jerome Powell, “If people who, instead of
spending that money in the economy, are spending that money by
sending money back to the federal government on their student loan
payments. That is a problem for the economy, is it not?”
Cody
Hounanian, program director of the group Student
Debt Crisis,
explained to me in an interview
that federal government loan debts are “around 80 percent of
the federal student loan market.” The rest is held by private
institutions. While Biden does not have the authority on his own to
address private loan debt, he could, with the stroke of a pen, cancel
federal government loans. Indeed, it may be the easiest and most
effective economic stimulus plan available to him using his executive
authority. Hounanian said, “The President of the United States,
no matter who it is, including Donald Trump, has the authority right
now to cancel student loan debt using executive action. This is a
power written into the Higher Education Act.”
Canceling
federal student loans is a racial justice issue as well. The existing
racial wealth gap
is exacerbated by student debt. One
report
estimated that racial inequities in student loans are even higher
than expected with Black graduates owing nearly two times the amount
that white graduates owe. According to Hounanian, “debt
cancelation is a civil rights issue. It is an important equalizer.”
During
his campaign, Biden endorsed
canceling $10,000 per person of student loan debt. Yet, as soon as he
won the election, Biden
called on Congress
to take up the matter. Zack Friedman writes
in an article for Forbes, “Biden is deferring to Congress to
pass relevant legislation on student loans, rather than act
unilaterally as president.”
At
a time when partisan gridlock in Congress has blocked most
progressive legislation from even getting a hearing, Biden’s
suggestion is naïve at best. Even Trump understood the
seriousness of the issue when he used his executive
power
(for once in a positive manner) to extend until the end of the year
student loan payment relief that was included in the CARES
Act.
Biden
is being flanked to the left by Senate Minority Leader Chuck
Schumer
as well. Schumer—not known as a champion of progressive
causes—has joined forces with Senator Warren to demand that
Biden cancel $50,000 per person of student loans through executive
action. If Biden is shy about using his executive authority in the
wake of the Trump presidency, the nation is in deep trouble.
“This
is an opportunity for Joe Biden to have his FDR moment,” said
Hounanian. His organization Student Debt Crisis has been working on
this issue for years and is part of a large coalition of hundreds of
organizations calling on Biden to do the right thing. A petition
launched earlier this year to cancel student loans has garnered more
than 1.3 million signatures. Advocacy groups are optimistic that this
may be the closest
they have come in years
to realizing their goal of eliminating student loan debt.
And
yet the voices of opposition are already pressuring Biden to do the
wrong thing. Fox
Business
in a laughably hypocritical piece claimed that canceling student loan
debt was regressive and would disproportionately benefit wealthier
Americans. The Heritage
Foundation,
a right-wing think tank, in a typically patronizing tone claimed that
loan forgiveness “rewards fiscal irresponsibility,”
failing of course to apply those same standards to tax breaks for
wealthy Americans or taxpayer-funded subsidies for corporations.
Education Secretary Betsy
DeVos
called the idea of debt forgiveness an “insidious notion of
government gift-giving,” simultaneously refusing to see the
economic benefits by her department’s policies to wealthy
Americans as “gift-giving.”
DeVos
also claimed that forgiving student loans was “unfair” to
those who did not go to college or those who managed to pay off their
loans. In other words, all should suffer because some suffered. This
is the conservative logic gleefully invoked to preserve any unfair
status quo that maintains wealth inequality. Imagine applying that
logic to, say, the 2017 tax reform bill. Why should corporations and
wealthy Americans get tax breaks that their predecessors or earlier
counterparts did not obtain?
Thankfully,
most Americans do not espouse the elitist views of out-of-touch
billionaires who have waged class war on the nation for decades. A
recent Pew
poll
found that an overwhelming majority supports federal government
action to address the student debt crisis.
Biden
has already made it clear that on the issue of student debt
forgiveness, he falls on the side of ordinary Americans and not on
the side of Fox Business or DeVos. What he appears unclear on is how
best to achieve his goal of easing the burden of student loans. If
his presidency does not seize the moment and use its clear authority
to realize his stated goals,—if he instead defers to an
unrealistic legislative path—then his campaign promises will
rightly be viewed as disingenuous.
As
the global pandemic was unfolding in the United States, Biden rightly
said,
“In this moment of crisis, we should be sending federal
resources to those who need it most. It’s not just good
economics—it’s the right thing to do.”
This article was produced by Economy for All, a project of the Independent Media Institute.
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