Democrats step up pressure on Biden on student loan forgiveness

Democrats are once again pressing President Biden to act on student loan forgiveness, stepping up the pressure on the White House to deal with the issue even as it struggles to bring a divided party together around the president’s agenda.

“Today would be a great day for President Biden and Vice President Harris to #CancelStudentDebt,” Senate Majority Leader Charles Schumer (D-N.Y.) tweeted on Thursday. Schumer regularly hits the White House on the issue on Twitter.

Rep. Pramila Jayapal (D-Wash.), the chair of the Congressional Progressive Caucus, similar tweeted on Thursday: “Student debt relief is good for people and good for the economy. @POTUS can and must lift the burden of student debt for 43 million Americans.”

Progressives want Biden to forgive up to $50,000 in federally held student debt per borrower. Doing so would wipe out all federal student debt for about 80 percent of the roughly 44 million Americans who collectively owe the federal government more than $1.5 trillion.

While Biden has ruled out canceling that much debt through executive action, he has opened the door to a smaller debt forgiveness plan with income requirements. He’s previously expressed a willingness to forgive as much as $10,000 per borrower, which would cover roughly 40 percent of federal student borrowers.

Broad-based student loan forgiveness has rapidly gained support among Democratic lawmakers amid the coronavirus pandemic. While progressives have long supported an ambitious level of forgiveness as a way to close the racial wealth gap, party leaders such as Schumer have come around to the idea since Biden’s election.

Debt relief advocates argue the issue could also help Democrats in next year’s midterms. 

“I think moderates who are running in tough races, this is going to be the difference for them, whether or not student debt gets cancelled,” said Thomas Gokey, organizer and co-founder of the Debt Collective. 

Polling, however, suggests most voters do not support forgiving loans for all student borrowers.

Just 27 percent of respondents to a March poll conducted by Grinnell College supported forgiving student loans “for all borrowers,” including just 41 percent of those who voted for Biden in 2020. Thirty-nine percent of respondents said they’d support forgiveness “only for those in need,” including 48 percent of Biden voters.

Speaker Nancy Pelosi (D-Calif.) has expressed doubts about both Biden’s power to wipe out student loans on his own and the political wisdom of doing so.

“Suppose your … child just decided they at this time did not want to go to college, but you’re paying taxes to forgive somebody else’s obligations. You may not be happy about that,” Pelosi told reporters in July.

The Biden administration has already wiped out roughly $9 billion in student loans held either by borrowers who were defrauded by for-profit colleges or those who qualified for pre-existing but dysfunctional forgiveness programs.

The Department of Education this week announced it would temporarily allow student borrowers to claim credit on all federal loan and repayment programs toward forgiveness, saying the action would “restore the promise” of the Public Service Loan Forgiveness program.

The program cancels student loans for individuals who have worked in qualifying public service for 10 years and made 10 years worth of payments on federal loans, but left out hundreds of thousands of borrowers who qualified for the program under previous administrations.

Gokey dismissed the program, saying it would only benefit 20,000 people.

“So far, the only thing the White House has done has been the teeniest, tiniest little, they’ve wiggled their pinky, in this incredibly complicated public service loan waiver,” he said.

The Education Department also tapped Richard Cordray, former director of the Consumer Financial Protection Bureau (CFPB), to lead the Office of Federal Student Aid (FSA), which oversees companies contracted to collect student loan payments. Cordray recently announced the creation of a special enforcement office within FSA modeled after the aggressive approach the CFPB has taken to student loan servicers who allegedly harmed borrowers.

The dual threat of Cordray and new CFPB Director Rohit Chopra likely prompted Navient to exit the student loan market after years of federal and state lawsuits, said Brandon Barford, partner at research firm Beacon Policy Advisors. Even so, investigations into other firms could take months or years to show results to borrowers.

An administration official told The Hill that more action is coming.

“In the coming months we will unveil similar regulatory improvements to, income-driven repayment, borrower defense to repayment, and closed school discharges among others. We’re also reshaping the loan servicing environment to better emphasize borrower outcomes and protections. These steps take time but we are working to deliver a better and fairer student loan system for borrowers,” the official said.

But Barford expressed doubts that a broad-based wipeout is still in Biden’s plans.

“If they were going to do the loan forgiveness at any level unilaterally, I would think they would have done it already,” he said.

The administration also announced in August that it would no longer make those classified as totally and permanently disabled by the Social Security Administration apply for their federal student loans to be discharged.

“There’s been a big push from the White House to show all the debt they’re cancelling,” said Natalia Abrams, president and founder of the Student Debt Crisis Center. “We’ve seen small buckets of debt getting cancelled. It’s really important, it should happen, but a lot of this should have happened in previous administrations.”

Advocates were energized by a letter Rep. Ilhan Omar (Minn.) led with 19 other Democrats last week urging the administration to publicly release a memo that Biden requested from the Department of Education in April to determine his authority to cancel student debt.

Advocates argue that Biden has authority to cancel student loan debt under the Higher Education Act of 1965, which gave the Education secretary authority to back student loans. 

“The reason you’re in student debt today is because Joe Biden woke up and made an active decision to keep you in debt,” Gokey responded. “We have to force him, he’s not going to do it on his own.”