Democrats pressure Biden to cancel $50,000 in student loan debt by executive action

Lawmakers call on White House to cancel up to $50,000 per borrower with stroke of pen

A group of Senate and House Democrats have reintroduced a resolution urging President Joe Biden to cancel up to $50,000 in federal student loan debt held among 44 million Americans.

Senate Elizabeth Warren told reporters on Thursday that the president's signature on such an order is the "single most effective executive action" he can take to kickstart a lagging economy during the coronavirus crisis and begin to close a racial wealth gap.

US Rep Ayanna Pressley said the president should "be bold and responsive to the movement that elected him".

With the stroke of a pen, the president can "provide relief to tens of millions of people".

"He can and must use this authority," she said. "The people deserve nothing less."

More than 45 million Americans hold more than $1.6tn in student loan debt, a figure that has surged within the last decade as private university enrolment grew and federal and state governments made steep cuts to higher-education funding against growing wealth inequality. Within the next four years, if unchecked, outstanding student debt is expected to hit $2tn.

Canceling outstanding federal debt could significantly shrink that balance.

Over the last several decades, federal and state governments have stripped funding for higher education, while tuition has spiked, federal policy changes effectively eliminated limits on borrowing, and predatory lending schemes and sky-high interest rates have trapped a generation of borrowers into a lifetime of debt.

During the public health crisis, Congress and the White House have approved freezes on student loan interest and repayments.

President Biden has indicated support for canceling up to $10,000 in debt through legislation that must pass through Congress, but Democrats have insisted the president use his executive authority under existing administrative statutes to direct the Secretary of Education to cancel up to $50,000 in federally held debts.

White House press secretary Jen Psaki told reporters on Thursday that the president would "look to Congress" for debt elimination but has not committed to an executive order to do so.

“Debt relief is, of course, an important priority for the president," she said.

Democrats' resolution also calls the president to cancel related tax penalties and pause future federal-loan payments and interest through the duration of the pandemic.

The pandemic, its economic fallout and lagging federal relief have likely exacerbated the debt crisis. A Pew survey last autumn found that 58 per cent of borrowers whose payments had been suspended during the pandemic would have difficulty paying them if they were to return.

Backing the renewed resolution are more than 325 civil rights, health, labour and student organisations, along with a broad list of Democratic lawmakers in the Senate and House of Representatives.

"For too many people, debt is the anchor that weighs them down," said Senator Majority Leader Chuck Schumer, who said he has met with the president on the issue.

Lawmakers have stressed that canceling student debt could close a massive racial gap – 90 per cent of Black students and 72 per cent of Latino students rely on college loans, compared to 66 per cent of white students, according to a 2016 analysis from the Consumer Financial Protection Bureau.

The Brookings Institute also found that Black college students owe $7,400 more on average than their white peers the moment they graduate – but those costs explode in the years that follow, with interest rates and graduate school borrowing, saddling Black graduates with nearly twice as much debt as their white counterparts.

Congresswoman Pressley said an executive order on student debt would "lay the groundwork for an equitable and just recovery, to truly build back better", borrowing the president's campaign slogan.

She pointed to the 2008 financial crisis and Wall Street bailout that "abandoned Black and brown communities that lost everything".

President Biden "can’t afford to tinker around the edges," she said.