Schumer, Warren introduce bill calling on Biden to wipe out student loan debt

A group of Democratic lawmakers led by Senate Majority Leader Charles Schumer (N.Y.) and Sen. Elizabeth Warren (Mass.) reintroduced a measure Thursday calling on President Biden to forgive up to $50,000 in federally held student debt per borrower.

The resolution from Schumer, Warren and Democratic Reps. Ayanna Pressley (Mass.), Ilhan Omar (Minn.), Alma Adams (N.C.) and Mondaire Jones (N.Y.) is not legally binding, but would serve as a formal congressional endorsement of a popular but polarizing progressive proposal. A similar resolution was introduced in the previous Congress.

“We are not going to let up until we accomplish it, until $50,000 of debt is forgiven for every student in the country,” Schumer said during a Thursday press conference. “Let’s get it done.”

Biden has faced growing pressure from progressives and borrower advocates to unilaterally wipe out a massive portion of the $1.6 trillion in student loan debt held by the federal government, owed by more than 43 million people. 

White House press secretary Jen Psaki reiterated Biden’s past support for $10,000 of student debt relief per borrower through legislation, but cast doubt on whether he would take executive action to do so if Congress doesn’t send him a bill.

“Debt relief is of course an important priority for the president,” Psaki said, adding that Biden extended a Trump-imposed pause on federally held student loan payments and interest accrual through September hours after his inauguration.

“[Biden] already took a step through an executive action on the first day and he would look to Congress to take the next steps,” Psaki added.

Supporters argue that Biden has the authority and responsibility to forgive student debt as the coronavirus pandemic roils the U.S. economy and imposes the greatest burden on those least able to afford it.

“Data shows that canceling the student loan debt would result in greater homeownership rates, more housing stability, improved credit scores, higher incomes, higher GDP, more small business formation and more jobs,” said Warren, who in December said Biden has a “moral obligation” to wipe out student loan debt.

“Canceling student loan debt is good for you, whether you have student loan debt or not, because it is good for our economy,” Warren said.

Debt forgiveness supporters say it would also help close the racial wealth gap, given the relatively higher rates of student loan delinquency among Black and Hispanic borrowers.

“The student debt crisis has always been a racial and economic justice issue, but for too long, the narrative has excluded Black and Latinx communities, and the ways in which this debt has exacerbated deeply entrenched racial and economic inequities in our nation” said Pressley, a member of the House Financial Services Committee.

The resolution calls on Biden to instruct the Education secretary to use provisions of the Higher Education Act and forgive up to $50,000 in debt per borrower. It also asks Biden to order the IRS to waive taxes on the canceled loans, since forgiven debt is typically treated as taxable income in the U.S.

The plan proposed in the resolution would wipe out roughly 80 percent of federally held student debt, according to an analysis from Beacon Policy Advisors, a D.C. research firm.

Passage of the resolution would be a major symbolic victory for debt forgiveness advocates, and could help ramp up pressure on Biden to follow suit. 

Even so, Biden has already drawn fire from Republicans for signing dozens of executive actions shortly after taking office and would likely be excoriated by the GOP for pushing through a massive debt forgiveness plan on his own. 

Economists are split on the potential benefits of broad loan forgiveness, as even some liberal analysts argue that wiping out student loans is not the most effective way to stimulate the economy.

Whether the Education secretary has the legal power to forgive student debt is also disputed. Former Education Secretary Betsy DeVos considered whether she had the authority to forgive student loan debt during the onset of the coronavirus pandemic in March, but Trump administration lawyers determined it would be illegal, according to a memo released last month.

Schumer, however, expressed confidence that debt forgiveness supporters could drive enough momentum to convince Biden to forgive a certain amount of debt. Schumer added that he and Warren discussed the issue with Biden and his economic advisers several weeks ago, and the president did not object to their campaign.

“I told the president when we started on this that we were going to try to rally the American people behind this to back him up when he decides—hopefully—to do it. And he had no problem with that,” Schumer said.

Updated at 12:24 p.m.