A Biden move to wipe out some student loans through “executive action, with the sweep of a pen,” would look smart politically before November’s midterm elections, but it easily could end up blocked by the court system, said one expert on student loans.
President Joe Biden made headlines on April 28 by saying he’ll roll out a plan for canceling federal student loans “in the next couple of weeks” — and that he’ll aim to forgive less than $50,000 in debt per borrower.
The problem with the legislative approach is Congress has struggled to pass substantive bills in recent years, and the “only thing that gets through is naming a post office,” he said. The White House has repeatedly said Biden would sign into law a bill wiping out $10,000 per borrower, but no such measure is close to coming to the president’s desk.
“If he was going to announce something, that would be the perfect time,” he told MarketWatch. Biden earned a bachelor’s degree at UD in 1965, before heading to Syracuse for law school. “So the key there is to not have the final court ruling before the elections, because then it’s old news.” One problem, however, is that a preamble limits this authority to the programs already approved by Congress, Kantrowitz said. Another problem is that “in this part” language establishes a link just to an old guaranteed student loan program that ended in 2010.
“You could cut the forgiveness period down to five years,” Kantrowitz told MarketWatch. People who already have been in income-driven repayment plans for five years would have their debts immediately forgiven, while others wouldn’t get the immediate cancellation they want, but it would come in years rather than decades, and their monthly payments would be limited if they’re not high earners.
“They forgive student loans and then what?” tweeted Brian Riedl, a senior fellow at the conservative Manhattan Institute who is focused on budget, tax and economic policy. “The same lenders keep lending. Students borrow even more expecting their round of forgiveness too. Colleges nudge up tuition more for these less-price-sensitive students. We’re in the same mess 5 years from now, with more bailouts.
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