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Warren, Pressley push Biden to cancel student loan debt

Mass. lawmakers ask White House to wipe away up to $50,000 per borrower

Drew Angerer/Photographer: Drew Angerer/Getty

If you thought top progressive lawmakers from Massachusetts would stop jousting with the White House now that a fellow Democrat is in office, you were mistaken.

The new president was sworn in less than a month ago, but Senator Elizabeth Warren and Representative Ayanna Pressley are wasting no time pushing Joe Biden to cancel up to $50,000 in debt for each of the roughly 44 million Americans who have federal student loans.

They and other prominent Democrats say Biden can wipe out this debt using his executive authority, bypassing the partisan quagmire of Congress. Doing so would deliver financial help to tens of millions of struggling Americans amid an economic crisis, particularly Black and brown borrowers who have been disproportionately affected by the nation’s $1.6 trillion student debt load, proponents argue.

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“It would open up more opportunities for more Americans than any single act the president could take,” Warren told the Globe. “It would close the racial wealth gap among those with student loan debt by 25 points. It would boost a faltering economy. And it is fundamentally the right thing to do.”

Warren said that she and Senate majority leader Chuck Schumer — who joined the push last year — have spoken directly with President Biden about their proposal. But so far the Biden administration has instead urged Congress to pass legislation forgiving up to $10,000 in federal student debt for borrowers — just one-fifth the amount progressives want.

A White House spokesman noted Biden paused federal student loan payments and interest on his first day in office, but did not answer questions about why the president has not embraced using his executive authority to cancel student loan debt or why he has supports a lower dollar amount.

Senate Majority Leader Chuck Schumer spoke during a press conference about student debt outside the US Capitol on Thursday in Washington, DC. Also pictured, left to right, Rep. Mondaire Jones, Rep. Alma Adams, Rep. Ilhan Omar, Sen. Elizabeth Warren and Rep. Ayanna Pressley. The group of Democrats re-introduced their resolution calling on President Joe Biden to take executive action to cancel up to $50,000 in debt for federal student loan borrowers.
Senate Majority Leader Chuck Schumer spoke during a press conference about student debt outside the US Capitol on Thursday in Washington, DC. Also pictured, left to right, Rep. Mondaire Jones, Rep. Alma Adams, Rep. Ilhan Omar, Sen. Elizabeth Warren and Rep. Ayanna Pressley. The group of Democrats re-introduced their resolution calling on President Joe Biden to take executive action to cancel up to $50,000 in debt for federal student loan borrowers. Drew Angerer/Getty Image

So Warren, Pressley, Schumer, and others are keeping up the public pressure for $50,000 in debt relief. On Thursday, Warren and Schumer plan to reintroduce a resolution they offered late last year calling on Biden to go big on debt cancellation, while Pressley and other Democrats expect to offered a similar resolution in the House.

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Liberal lawmakers have also pressed the White House with op-eds and Tweets. And more than 300 groups — including labor unions, civil rights organizations, and consumer advocates — have signed a letter urging Biden and Vice President Kamala Harris to cancel $50,000 in student debt.

The efforts to boost the student loan proposal may showcase the role that Warren and Pressley, along with their progressive allies, could play during the Biden presidency, trying to push the moderate Democrat to embrace ideas popular in the party’s left wing. The role is a reprise for Warren, who pressed the Obama administration on issues from complex financial instruments to forgiving federal student debt for borrowers defrauded by for-profit schools.

When it comes to actual policy, however, there’s sharp debate about whether forgiving student debt is the best way to shore up the economy and help people who are struggling the most.

Critics, including some liberal economists, say the proposal being pushed by Warren, Pressley and others wouldn’t actually goose economic growth that much, despite a price tag of $640 billion or more. Across-the-board cancellation also would mean plenty of well-off borrowers would benefit, raising concerns about fairness.

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An analysis published by the Brookings Institution last fall found that almost 60 percent of outstanding student loan debt is held by households in the top 40 percent of income, those making more than $74,000 a year. The authors argue that low-income workers hit hardest by pandemic-driven job losses — such as restaurant and retail workers — live in households that are less likely to have student loans.

The Committee for a Responsible Federal Budget argues student debt cancellation would deliver far less “bang for the buck” for the economic recovery than other federal spending in part because the government already paused payments and interest accumulation on federal student loans starting last March, relieving the immediate pressure on many borrowers. Biden extended that pause through the end of September.

“Forgiving the loans doesn’t change anybody’s monthly cash flow,” said Jason Delisle, a student loan expert at the American Enterprise Institute in Washington. Once the payments pause expires, borrowers can also take advantage of an income-based repayment program that caps monthly payments and forgives outstanding debt after 20 years, he said.

Proponents of student debt cancellation disagree, arguing the income-driven repayment and forgiveness programs are hopelessly inadequate.

Fewer than 3 percent of borrowers who enrolled in the Public Service Loan Forgiveness program have been deemed eligible, even when borrowers thought they were doing everything right.

“This is an emergency right now, and this is relief that can be delivered quickly,” said Eileen Connor, codirector of Harvard Law School’s Project on Predatory Student Lending.

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Democrats also argue that sweeping loan forgiveness would particularly aid Black and brown communities.

Black Americans, for instance, on average borrow more to go to college, borrow more while in school, face a harder time paying off the debt, and experience far higher rates of default than their white peers, according to research cited by proponents of student debt cancellation. And progressives argue that canceling student loan debt would also help the country take a step toward closing the yawning racial wealth gap.

“It’s about an equitable economic recovery,” Pressley said. “If people really do believe that Black Lives Matter, then the only receipts that matter in this moment are budgets and policies.”

She and other proponents also argue the cancellation would also help a broader swath of Americans who can’t afford to buy a home, start a family, or launch a business.

Roughly 7 million Americans over age 50 still have federal student loan debt, and every year the government garnishes the Social Security benefits of tens of thousands of older people to recoup defaulted student loan debt.

Warren pointed to another data point: Forty percent of people with student loan debt never obtained a college diploma. These borrowers are generally stuck earning the wages of someone with a high school diploma, “while they’re trying to shoulder tens of thousands of dollars in student loan debt,” she said.

“It’s a bone crusher,” Warren said. “It’s an opportunity crusher.”

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Victoria McGrane can be reached at victoria.mcgrane@globe.com. Follow her on Twitter @vgmac.