Can President Joe Biden actually cancel student loan debt with an executive order?

Can President Joe Biden cancel the student loan debt with an disposition? Senate Majority Leader Chuck Schumer, DN.Y., has said in several press conferences that Biden can wipe such debts with a “stroke of a pen”.

Cutting student debt up to $ 50,000 has been a reputation for many younger Democrats, seeing their ability to borrow for homes or cars negatively impacted by high student debt. In January 2021, the student loan debt held by 44.7 million Americans was $ 1.73 trillion, according to the Federal Reserve.

As a 2020 presidential candidate, Biden pledged to “award all undergraduate tuition fees related to federal student debt from two- and four-year public colleges and universities and private (historically black colleges and universities) and (minority institutions) for debt. Owners earning up to $ 125,000. “

Biden’s approach wasn’t as aggressive as many activists and some Democratic incumbents wanted it to be, and Biden didn’t include funding for student loans when he released his budget proposal for the 2022 fiscal year in May 2021.

Critics of student debt cancellation, particularly the most aggressive moves, argue that doing so would unfairly treat Americans who have saved up on student loan repayments.

The White House has indicated that Biden is investigating the matter further. He has asked Education Secretary Miguel Cardona to create a memo on his legal authority to cancel student loan debt, and Biden has also said he would like Congress to take action.

However, Biden has set some limits. In February he said in a town hall that he was “willing to write off the $ 10,000 debt, but not ($ 50,000) because I don’t think I have the authority.”

Still, Schumer and his allies keep up the pressure.

On June 9, Schumer teamed up with Senator Elizabeth Warren, D-Mass., Actress and activist Alyssa Milano, and the NAACP in a #CancelStudentDebt Voices event hosted by the group Student Debt Crisis.

In a tweet he sent out that day, Schumer reiterated his claim about how easy debt relief was to accomplish. “President Biden can #KündigenStudentDebt with the stroke of a pen,” tweeted Schumer.

I was so proud to be part of @SenWarren, @Alyssa_Milano, organizers, and so many Americans, telling their stories and pushing for action to end student debt.

President Biden can #CancelStudentDebt with the stroke of a pen. https://t.co/o7bxHCQa9q

– Chuck Schumer (@SenSchumer) June 9, 2021

Is Schumer right that Biden can cancel the student loan debt? Since this is legally discussed and ultimately subject to court decisions, we will not rate it on our Truth-O-Meter. However, we have found that the problem is not quite as clear as it sounds to Schumer.

The central provision that can be cited for the deletion comes from the University Act, which was originally signed in 1965 and has since been updated.

In particular, the law grants a presidential administration, through the minister of education, the power to “enforce, pay, compromise, give up or release” federal student loans held by the state. In fact, the Higher Education Act authorized President Donald Trump and Biden to suspend student loan debt payments during the coronavirus pandemic.

However, experts disagree on whether the president can approve far-reaching debt relief through an executive order. There are enough legal questions that any move the president took would likely lead to litigation, experts said.

“There are cases where executive decisions by presidents are thrown out in court for taking action that was not allowed by law in the past,” said Jason MacDonald, a political scientist at West Virginia University.

The Trump administration has experienced such a legal setback with its initial travel ban for people from Muslim-majority countries, MacDonald said.

While modest efforts to reduce student debt do not pose legal obstacles, “the more ambitiously that authority is used, the greater the possibility of legal challenge,” said Judith Scott-Clayton, professor of economics and education at Columbia University.

One of the controversial topics could be the earlier Congressional amendments to the Higher Education Act, which set out tight terms under which student debt can be forgiven. Previous federal laws dealt with debt relief for teachers and public sector workers, cases of schools closing before a student graduates, and cases of death or disability of a student. It’s not so clear whether blanket forgiveness would meet legal requirements, experts said.

Likewise, the authority of the University Act to “compromise, waive or approve” was typically used in the past for loans only under exceptional circumstances, in individual cases and for loans that cannot be expected to be repaid. Despite the high debts of many graduates, it is not clear whether all of their loans would be considered unaffordable.

“‘Compromise’ is typically used when it is impossible for someone to pay a debt to the government so that the government can make a deal,” said Adam Looney, senior fellow at the Brookings Institution. “This is very different from mass cancellations.”

Meanwhile, another law, the Federal Claims Collection Act, gives federal agencies the power to collect or compromise claims and suspend or terminate collections.

However, this law sets “high standards for when the government can compromise a debt in order to limit circumstances, e.g. For example, if the debtor is unable to pay and this inability is verified, or if the cost of collecting the debt is too high to collect, ”Looney said.

This article was originally published by PolitiFact, which is part of the Poynter Institute. It will be republished here with permission. Check out the sources for these fact checks here and more fact checks here.

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