Schumer suggests student debt forgiveness through executive order

In a recent interview with Anand Giridharadas, Senate Minority Leader Chuck Schumer suggested that President-elect Joe Biden should, by ordinance, issue substantial student loan waivers and outlined a possible FDR-style agenda during the first 100 days of Biden.

“I have a proposal with Elizabeth Warren to pay off the first $ 50,000 debt,” said Schumer. “And we believe Joe Biden can do that with the pen contrary to the law.”

Schumer also mentioned measures to combat climate change, wealth inequality, immigration reform and criminal law reform. “It’s a big, bold agenda,” he said. “My job is to get so much of this and get the votes for it, which is obviously not something I can snap my fingers and do.”

Biden has yet to provide support for such a substantial student loan waiver. Instead, the president-elect has proposed creating a program that provides $ 10,000 undergraduate or graduate debt relief for up to five years for each year of national or community service.

According to the proposal, “people who work in schools, government and other non-profit organizations will automatically be included in this award program; up to five years prior national or non-profit service will also qualify.”

When CNBC asked Make It economists about the proposal, many said it showed promise and opportunity for common ground.

“I think putting this policy on the table is a positive move,” said Sandy Baum, senior fellow at the Urban Institute and professor emeritus of economics at Skidmore College. “We’re talking about something that is an exchange for services. And these services, if properly organized and defined, will be of real benefit to society, so we’re not just throwing money in the ocean. We are actually to get something for it. In addition to the fact that we give people money to spend and they will spend it in business. “

“I think his loan forgiveness proposal and student loan prioritization are really a breeze,” said Judith Scott-Clayton, associate professor of economics and education at Columbia University. “I think this is very powerful, especially in terms of the consequences of a loan default and the trends we are likely to see if nothing is urgently done on this matter.”

“This is an opportunity,” said Rick Hess, political scientist and director of education policy at the American Enterprise Institute, arguing that Biden should consider expanding his qualifying work experience to include for-profit organizations. “If the Biden team can compromise on facilitating student loans or getting student loans, there may be some common ground on the left and right here.”

Under President Donald Trump’s leadership, the total amount of student loans held by Americans has grown by more than 16%, from $ 1.44 trillion in 2017 to around $ 1.68 trillion today.

An estimated 46 million Americans have student loans, making them the second largest household debt in the country after mortgage debt.

These sums worry many economists, who say that student debt disproportionately affects women, contributes to the racial wealth gap, disadvantages younger generations, and slows the economy.

And as lawmakers continue to debate future coronavirus easing and economic incentives, although a deal currently seems unlikely, some are hoping that student debt relief could be included.

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