Progressives Press Biden, Cardona on Student Debt Forgiveness Memo

By Owen Daugherty, NASFAA Staff Reporter

President Joe Biden and Education Secretary Miguel Cardona have been put on notice by a group of 15 Democratic House members to procure a memo outlining their authority to cancel student loan debt for millions of borrowers.

In a letter sent to Biden and Cardona last week, the group of lawmakers — led by Reps. Ilhan Omar (D-Minn.) and Alexandria Ocasio-Cortez (D-N.Y.) — urged them to release a long-awaited memo Biden requested in February to determine his authority to broadly cancel student debt through administrative action.

The letter calls for the public release of the memo by no later than Oct. 22, 2021, more than eight months since the memo was first requested by the White House and more than six months since White House Chief of Staff Ron Klain said that it was expected in a matter of weeks.

“With … only four months of pandemic forbearance left, borrowers are anxiously awaiting the administration’s actions,” the letter states. “The time has come to release the memo and cancel student debt.”

The letter points to several legal scholars who have argued that the president does in fact have the broad authority to cancel student loan debt without having to go through Congress.

Additionally, with roughly 16 million borrowers in the midst of transitioning to a new student loan servicer, the letter notes “any attempt to restart payments or remain silent on matters regarding debt cancellation will result in unnecessary confusion and harm.”

Both Biden and former President Donald Trump cited authority within the Higher Education Act to pause federal student loan payments amid the coronavirus pandemic, the same authority progressives have pointed to as reasoning for why Biden can cancel student loans “with the flick of a pen.”

“It would be an exercise in legal gymnastics to suggest that the President had the authority to cancel the interest on student debt on his first day, but lacks the authority to cancel the principal on student debt moving forward,” the letter adds.

Mark Kantrowitz, a student financial aid expert, said the final payment pause makes the most logistical sense as to when the memo could be released and any potential forgiveness could take place considering borrowers aren’t making payments and the Department of Education (ED) is tasked with finding new servicers for borrowers. He added that due to lingering vacancies at ED, such as recently confirmed Undersecretary James Kvaal, the memo couldn’t have come out any earlier.

“There are still half a dozen senior political appointments that haven't yet been implemented,” he said. “[ED] probably wants to have a couple other people on board just to have more pairs of eyeballs scrutinizing any [debt forgiveness] proposal.”

He added that progressives will most likely continue to make statements and send letters regarding debt forgiveness to keep the drumbeat going until a determination is made, but the October 22 deadline for the memo to be released imposed in the letter doesn’t hold much weight.

“On October 23 they might do something else to try to keep the issue alive,” Kantrowitz said. “They're going to keep the pressure up, and at some point the administration will respond.”

Whether the president could broadly cancel debt remains unclear and is a point of debate among experts. So far, Biden has been hesitant to commit to any form of unilateral student debt forgiveness. While he campaigned on canceling $10,000 in federal student loan debt for each borrower in response to the pandemic, he balked at calls to eliminate up to $50,000, telling an audience at a town hall event early in his presidency that he “will not make that happen.”

The letter marks the latest attempt from progressives to mount a campaign aimed at persuading Biden to cancel student loan debt for tens of millions of borrowers. Since ED in August announced the final extension of the pause on student loan payments and interest accrual, leading members in Congress, including Sen. Elizabeth Warren (D-Mass.) and Senate Majority Leader Chuck Schumer (D-N.Y.), have increased their pressure, ostensibly seeing the final extension as their best chance to achieve widespread debt forgiveness.

“Even during times of economic normalcy, student debt is a policy failure. Turning student debt payments back on in the middle of a pandemic is an act of policy failure,” the letter concludes. “Cancelling student debt is both the morally right and economically sound thing to do.”


Publication Date: 10/13/2021

Robert W | 10/15/2021 9:29:19 PM

These two U.S. Representatives should introduce a bill in the U.S. House of Representatives and let it proceed through the legislative process. Congress is the lawmaking body, as well as the appropiating branch of our democratic system of government, not the executive branch.

IMHO, the Federal government needs to get out of the student and parent loan business. Let the private lendors take the risk, not the U. S. taxpayers. There are many higher ed options for students with a variety of tuition price points. Linda S. is right.

Imho Higher Ed in its present business model is not sustainable. Costs need to be reduced by cuts in administratiion and student services. Colleges are overripe for downsizing and comsolidation.

There are also more jobs available now than I can ever remeber in my lifetime offering higher rates of pay, coupled with a shortage of workers to take them. Sometimes I wish I was 18 again. College is not a necessity.

Just my opinion.

Bob Walker

Linda S | 10/15/2021 9:54:12 AM

In case anyone needs a history lesson or isn't old enough to know - during the 1960's, there were colleges that WERE FREE. California state colleges, CUNY in NYC, Cooper Union in NYC and many others. Look it up, no lie. But in the 1970's, when the baby boomers were transitioning into their careers and the birthrate went down, college attendance was seeing a drop. So, how do you get students to fill seats? YOU GIVE THEM LOANS and MARKET COLLEGE so everyone believes it is the way out of poverty and into the middle class or beyond. It was in the late 70's and onward that colleges and the US government promoted loans and marketed college attendance. THEN, a college education meant something for your life. NOW, even if you make the so-called million more in your lifetime, with student loan payments and interest, salaries that do not cover inflation, and businesses that cry for cheaper labor, many college graduates cannot make ends meet. I've seen this struggle. I have been in higher education administration and financial aid/literacy/default management since 1983 and unless you are a med student, accounting major or in marketing (maybe one or two others) , your ability to make a salary that keeps up with the prior variables I mentioned has declined.

The system has ALWAYS been in place to get students into debt. It is not some idealized, grandiose plan to educate our population so they can rise up. It was a collaboration or financial companies along with our government to make money on the backs of those who strive for a better life. It basically has not worked. It needs to have a restart and the only way to do that is to forgive some portion of all student debt and have a better plan to educate our people going forward. And please stop with the whole tax thing!! There are millionaires who declare bankruptcy every day and corporations that pay little to no taxes and create more issues for taxpayers than a few mil in student loan forgiveness would. Again, look it up.

Ben R | 10/15/2021 9:38:04 AM

The solution lies in more responsible lending, not in more cancellation programs.

When the HEA was originally written, loan amounts were all capped at reasonable amounts that the government knew could be collected, where most institutions were selective, and was based on a system where most borrowers had long earning careers ahead of them. Now, more than half of all borrowers are over 30, over half of institutions are non-selective, and we have things like graduate and PLUS loans which have little or no cap and which often end up being more than most can pay in their remaining careers. In this situation, some ability-to-repay measure seems appropriate, even if it starts at amounts above a a base threshold and is based on the cohorts coming out of the school - not necessarily the individual.

Helping people facing temporary unforeseen circumstances is one thing, but lending excessive amounts to borrowers we know in advance will never be able to repay the loans is just bad lending.

David S | 10/14/2021 1:44:51 PM

Daina - Student loans do not have an ability to repay based on income at the time of application for a very good reason; these loans exist to help students pay for an education, which in turn can lift them into a higher economic status. They are a public service, a program that grew out of the Civil Rights movement when LBJ signed the Higher Education Act of 1965, part of his War on Poverty agenda. Banks give out loans to make a profit off the interest; they are not for the same purpose as a publicly funded program to help people afford what they otherwise could not.

And I don't think you have to worry about Manchin and Sinema. They've shown their true colors as to who they're in Washington to help. It's not poor people.

Irish B | 10/14/2021 12:16:45 PM

I do believe there are borrowers who do well financially and are doing fine making student loan payments. However, there are people like me who hold a degree with student loan debt who are barely making enough money to comfortably survive. I was put in a position to earn a degree or lose my job that I have been working for several years. I accumulate the student loan debt but did not receive adequate compensation. I am eligible for retirement in less than a year but can't retire because I will not have met the PSLF requirements of 10 years of consecutive payments. Perhaps there could be a maximum age or retirement eligibility for which no more payments are required.

Sheree T | 10/14/2021 8:53:30 AM

Statistically, persons with degrees earn $1 million more in their lifetimes than those without. Only 30% of the country has degrees. It seems wrong to take tax income from the other 70% to pay off the debt for people who will earn more than them.

Besides with Income Based Repayment plans, no one should be defaulting.

Daina A | 10/14/2021 8:42:51 AM

This entire idea is a gross manipulation of the system. Moreover, it is a slap in the face to the U.S. taxpayers that made this pool of money available to students to borrow in "good faith" and those students who signed a promissory note that clearly outlines "promise to pay" and to taxpayers that paid their student loans in full.

Does this letter of request also include a refund for all those who paid their student loans in full?

Why is this is the only financial institution in the U.S. that doesn't check for accuracy on a FEDERAL LOAN Application or ability-to-pay?

If the banking industry run their businesses like the USDE, they would not be in business. So, therefore, I have already emailed my State Rep and Senator and Senators Manchin and Sinema to not pass this bill with this included.

David S | 10/13/2021 10:34:44 AM

Just do it. It's time we take a look at what we've been doing and admit that the model isn't working. Negative amortization makes these loans hard enough to pay off, then once a borrower actually does default, penalties are added on; the result is punishment for being poor. That's the opposite of what financial aid programs exist for in the first place. We have created a punishment-based student loan repayment system.

If the feeling is that cancelling all debt is too much because there are borrowers who are doing just fine and can afford to meet their obligations, fine, implement an income cap of some sort. Yes, that can create a cliff effect, but that's a concept that permeates practically everything about financial aid eligibility. And consider a maximum age after which no more payments are required, as they do in the UK. But something has to be done. No amount of reminding everyone "but this is what the student signed up for" is going to change this or improve anyone's life. If we could have given these students - especially those with high need - grants instead of loans from the outset, we would have in a heartbeat. We know who's struggling, let's change the loans to grants retroactively.

Inaction and the status quo will only serve to make the situation worse and further erode America's trust in the higher education system.

Joel T | 10/13/2021 10:11:55 AM

Could I get him to forgive the debt for a car I bought during the pandemic?

James C | 10/13/2021 8:38:37 AM

It could be argued the president has the authority to forgive debt that was incurred during the emergency pandemic. Loans disbursed between January 1 2020 and June 30, 2021 should be forgiven. Cancelling all debt is a bridge too far. Many graduates have good or high paying jobs and can afford to pay off the debt. If they cannot, there are many options such as forbearance and income based repayment.

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