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During a press conference last month, Speaker Nancy Pelosi told reporters that the president cannot cancel student debt through an executive order. “People think that the president of the United States has the power for debt forgiveness,” she said, adding, “He does not. He can postpone, he can delay, but he does not have that power…. The president can’t do it. That’s not even a discussion.”
But Pelosi’s statement is at odds with many of her colleagues in Congress, who are pressuring the president to cancel at least $50,000 in student debt using executive authority. Supporters of such an action include Senate majority leader Chuck Schumer, Senator Elizabeth Warren, Representative Ayanna Pressley, and over 75 other lawmakers. Over 415 organizations, hundreds of academics and experts, and dozens of attorneys general have shared their support as well. On August 11, a coalition of 80 organizations sent a letter to Speaker Pelosi’s office defending the president’s authority to cancel student debt.
The president has broad authority to cancel federal student loan debt through the Higher Education Act. Passed by Congress in 1965, the act states that the secretary of education may “enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.” Legal experts, including those at Harvard Law, say that this provision would allow for an executive action that cancels federal student debt. And the precedent has already been set.
In March of 2020, Donald Trump used executive authority to pause all student loan payments and interest, with no pushback from legal experts or members of Congress. President Biden later extended that student loan payment pause, twice. The authority used to pause student loan payments and interest is, effectively, partial student debt cancellation, and this is the same authority activists and progressive Democrats are urging Biden to use to deliver on his campaign promise of cancellation for borrowers.
In a recent survey conducted by Student Debt Crisis and Savi, 60 percent of borrowers said that they are not financially secure enough to begin payments until after September 2022 or do not know when they will be ready, and 75 percent of respondents said that the payment pause is critical to their financial well-being. Recent polls have also shown that a majority of voters are in favor of debt cancellation, and found strong support from both Democrats and Republicans.
Student loan cancellation would also address deep racial inequities, as the communities hardest hit by the Covid-19 pandemic also face disproportionate amounts of student debt. Black people in the United States are twice as likely to die from Covid-19 compared to white people, and Black college graduates owe over $50,000 on average after four years of graduation, compared to $28,000 on average for a white college graduate. Student debt cancellation would provide a chance to level the playing field for people of color, while also boosting annual GDP by up to $108 billion per year.
Both FedLoan and Granite State, two of the largest federal loan servicers, recently announced that they will stop servicing federal student loans after December, so more than 10 million people, or roughly one in four borrowers, will need a new loan servicer come the new year. With student loan payments set to resume on February 1, the government will have to face the task of shifting over 10 million accounts to a new servicer in the space of a few months. It would simply be easier for the Biden administration to cancel the loans of the millions of borrowers who require transfer.
Cancellation through executive action is the only immediate way to address the student debt crisis, as student borrowers cannot wait for a divided Congress to pass debt relief. The urgent need for student debt cancellation is highlighted by the voices of borrowers across the country. Legal experts have provided clear evidence for the president’s power to cancel student debt, but Biden’s team is researching the matter independently. In April, the administration promised to release a memo highlighting the extent of the legal authority, but has yet to do so. Extending the pause on student loan payments is much-needed relief, but permanent debt cancellation is the only long-term solution bold enough to meet this moment. President Biden can—and must—cancel student debt immediately.