President Joe Biden is agonizing over ordering a sweeping cancellation of student loan debt, despite pressure from Democrats -- including Vice President Kamala Harris -- eager for a political win before midterm elections, according to several people familiar with the matter.
While he said last month that he’s considering “some debt reduction,” Biden has not made up his mind about many details of the plan, including how much debt to forgive per borrower, the people said. And though White House officials have debated the contours of a forgiveness program internally for more than a year, there is no real consensus on the best path forward.
White House Chief of Staff Ron Klain and a deputy director of the National Economic Council, Bharat Ramamurti, are among the aides urging Biden to announce some form of student loan forgiveness.
The White House’s hesitance on the issue represents the latest fracture within the Democratic party, which Biden has failed to unite around his ambitious economic agenda. But this time it’s the Democratic rank-and-file who haven’t yet persuaded the president to use his power for broad loan relief.
Advocates view the move as having few political downsides. Many progressive lawmakers have called on the White House to cancel at least $50,000 in debt per borrower, if not the entire loan portfolio held by the Education Department, which totals more than $1.6 trillion.
Ramamurti, a former aide to Senator Elizabeth Warren, has been especially vocal about a forgiveness program, according to people familiar with internal deliberations. He views canceling student debt as not only politically popular but also a tool to reduce US racial and class inequities.
Biden’s reservations center on both the legality of canceling debt through executive action and whether broad forgiveness would be good policy, the people said. He unequivocally supports Congress passing a law to forgive $10,000 in debt per borrower, one White House official said.
The people asked not to be identified discussing internal deliberations.
“The consideration of what you can do with executive authority and action, it always takes a long time,” White House Press Secretary Jen Psaki told reporters Thursday at a breakfast hosted by the Christian Science Monitor. “And there are significant policy questions here -- good policy questions.”
While some in the education community are skeptical of Biden’s commitment to forgiving student loans, regarding him as having been pushed to support the idea by Warren and other liberal opponents in the 2020 Democratic primary, the government has been laying groundwork for the move since he took office.
Policy experts throughout the administration have for months studied options for a forgiveness program such as income requirements, whether to include graduate school loans or only undergrad debt, and how it would apply to people who took out debt for school but never received a degree.
More than a year ago, Biden ordered the Justice and Education departments to determine the extent of his power to forgive student debt. The Education Department recently released a year-old “pre-decisional & deliberative” legal memo on the issue, but fully redacted its text.
Those six blank pages are only fueling speculation about the administration’s plans as midterm elections approach in November.
An Education Department spokesperson said the administration wants long-term change to make college more affordable and officials are still considering options for further executive action.
Within the White House, plans have been under development by officials on the National Economic Council, Council of Economic Advisers and Domestic Policy Council. Susan Rice, the DPC director, isn’t among officials pushing Biden for any sweeping move, two of the people said.
Biden has sought to aggressively expand higher education options for lower- and middle-income people, proposing as part of his “Build Back Better” economic plan to make community college free and expand Pell Grants, which help pay for college for the lowest-income Americans.
But he didn’t include loan forgiveness in the plan, preferring that Congress devise a program on its own.
With lawmakers gridlocked on almost all issues, Democrats who favor loan forgiveness have increasingly pressed Biden to relieve some debt through executive action.
White House officials have said Biden is considering forgiving at least $10,000 in federal loans per borrower, and have signaled that people making more than $125,000 a year likely wouldn’t be eligible. Legal experts say an income limit would make an executive order harder to challenge in court.
Republicans have assailed loan forgiveness as a potential fresh driver of inflation and unfair to people who’ve paid off their student debts. Senate Republican Leader Mitch McConnell has labeled student loan cancellation “a jubilee for elites” and Republicans in the House and Senate have introduced symbolic legislation that would block Biden from forgiving loans through executive action.
But loan forgiveness enjoys broad support among Democrats. Even Joe Manchin, the West Virginia senator who has stalled Biden’s economic agenda in the evenly divided Senate, has said he supports at least some relief.
About 43 million Americans have outstanding federal student loans, and the average balance is more than $37,000. The majority of the debt is owed by households in higher income brackets, according to the Education Data Initiative.
Black college graduates owe an average of $25,000 more in student loan debt than White graduates.
About 64 percent of registered voters support at least some student debt forgiveness, according to a Politico/Morning Consult poll last month. But only 5 percent said they considered education issues -- like student loans -- the top issue for the midterms.
Many legal experts, even those once skeptical of Biden’s authority, have concluded that he can order at least some loan forgiveness. But the scope of his power -- and where he derives it -- remains under debate.
A provision of the Higher Education Act gives the secretary of Education authority to “compromise, waive, or release the department’s claims against student borrowers.”
A 2003 law also arguably gives Biden the power to order the Education secretary to forgive federal student loan debt during emergencies, such as the COVID-19 pandemic, said Luke Herrine, an incoming assistant professor of law at the University of Alabama, and Jonathan Glater, a law professor at the University of California, Berkeley.
But Mark Kantrowitz, a financial aid expert, said using either of those two laws to create a broad new forgiveness program -- even in a targeted way -- would be easily challenged in court. Biden instead could modify existing repayment plans by decreasing the current forgiveness period, now usually 20 or 25 years, and changing income caps, Kantrowitz said, likely avoiding a legal challenge.
It’s unclear who would have standing to sue over a forgiveness program, though plaintiffs might include members of Congress or loan servicing companies that hold federal contracts and risk a financial loss.
Progressives say there’s precedent for a forgiveness program, as both the Trump and Biden administrations paused repayments on student loans and interest accrual during the pandemic. Biden has yet to allow payments to resume, and has already canceled $18.5 billion in student loans, including more than $5.8 billion for borrowers with severe disabilities.
“It’s clear they have the power; they’ve been using it,” Warren said last week.