Biden called for student debt to be canceled

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A coalition of 236 predominantly progressive groups, including close allies such as the American Federation of Teachers and the National Education Association, called on the president-elect on Wednesday to use his executive powers to cancel student debts on the first day of his inauguration.

In a letter to Joe Biden and Vice President-elect Kamala Harris, the groups did not specify how much debt they plan to cancel. However, they noted that during the campaign, Biden had pledged to “immediately” cancel $ 10,000 of each borrower’s debt as part of his response to the coronavirus epidemic.

“Before the public health crisis of COVID-19 began, student debt was already a drag on the economy, weighing the worst on black and Latinx communities and women. That weight is likely to grow exponentially, given the disproportionate toll that COVID-19 takes on both the health and economic security of people of color and women, “the groups wrote, saying” bold action is needed “.

When asked how executive ordinance addressed the problem, however, Biden and his campaign’s national political director stopped swearing to act alone and instead mentioned the more tortuous path of going through Congress.

At a news conference Monday speaking about the economic recovery plan he is working on, Biden was asked if and if cutting part of the country’s $ 1.5 trillion student debt was included in his plan he would do so through an executive order.

“It appears in my plan,” he said without answering directly whether he would act by ordinance. Instead, he referred to his support for the House Democrats-driven COVID-19 relief package.

“I’ve set it out in detail,” he said. “For example, the law passed by the Democratic House calls for the immediate waiver of $ 10,000 on student loans.”

Stef Feldman, the national political director of the Biden campaign, also mentioned a legislative avenue when asked about an executive order during a call with members of the Education Writers Association.

“Vice President Biden accepted what I believe was originally proposed by. was submitted [Democratic] senator [Elizabeth] Labyrinth. In the midst of this crisis, she proposed law to ensure that the moment we find ourselves, we immediately get $ 10,000 off debt for every student debt holder. And that is the proposal that Vice President Biden accepted. “

Alexis Goldstein, a senior policy analyst at Americans for Financial Reform, a progressive advocacy group calling for widespread student debt relief, and a signatory to the letter, said she hadn’t read much of those comments.

The groups, which include the NAACP, and borrower advocacy groups like Student Debt Crisis, called for action once Biden takes his oath of office.

“There is growing energy and strong bipartisan public support for immediate, broad-based debt relief,” the groups wrote. “Such executive action is one of the few tools available that could instantly boost more than 44 million borrowers and the economy.”

Republicans in Congress this year, while negotiating coronavirus relief packages, spoke out against student debt relief because they believed it was unfair to people who have not attended college. The letter also noted that Warren and Senate minority leader Chuck Schumer asked the next president in September to cancel $ 50,000 in government student debt from all borrowers through an ordinance, a move that would cut the balances of $ 75 Percent of all borrowers would completely eliminate it.

During the campaign, Daniel Zibel, Deputy General Counsel of the Department of Education for Post-Secondary Education in the Obama administration, also urged the next administration to cross the department’s boundaries, which they believe the country’s higher education law allows to do.

In a series of policy papers, Zibel and Aaron Ament, chiefs of staff of the General Counsel’s Office of the Department of Education under the Obama administration, have urged a Biden administration, without going to Congress, to unilaterally cancel the student debts of those whose colleges have closed and all those who have been betrayed by their institutions. The National Student Legal Defense Network, founded by Zibel and Ament, also argued that the Higher Education Act gave Biden the power to cancel the debts of borrowers with disabilities and hold the owners of for-profit businesses that defrauded students liable for any canceled debts make and other federal costs.

“While law enforcement would be welcomed, legal analysis has shown that the HEA has the powers the new administration needs to rid borrowers of much of their student loan debt,” said Kyle Southern, higher education policy and advocate for Young Invincibles, a Millennial Advocacy Group who also signed the letter to Biden and Harris.

On the flip side, Biden could alienate Republicans in Congress if he circumvented them through an executive order, said Frederick Hess, director of education policy at the conservative American Enterprise Institute. And he will need your support to get other elements of his agenda off the ground, he said.

Some voices in his government could also question the wisdom of debt relief. Jason Furman, who served as President Obama’s chief economist and is named for a similar role in the Biden administration, doubted the wisdom of widespread debt relief on Twitter on Sunday night.

Furman, who was mentioned in press reports as a potential chairman of Biden’s economic advisor or chairman of the Federal Reserve, essentially argued that any debt relief would be taxable.

Any relief for borrowers would therefore be at least partially offset by higher taxes. As a result, the amount of money borrowers could spend and pump back into the economy would not justify the potential $ 1 trillion cost of debt relief.

“Student loan debt relief likely has a multiplier close to zero,” tweeted Furman, now a professor of economic policy at Harvard University. “Forgiveness is taxable. If this negative cash flow effect predominates, the net interest savings would even be negative. And the wealth effect is small in the short term.

“Arbitrary / regressive $ 1K for ~ $ 0 GDP, not a good idea,” he wrote.

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