Biden rejects proposal to cancel $50,000 in student loan debt

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Interest rates doubling for govt-supported student loans

President Joe Biden said Tuesday that he does not have the authority to forgive $50,000 in student loan debt for millions of Americans as congressional Democrats continue to pressure the White House for additional relief for struggling families amid the coronavirus pandemic.

“I will not make that happen,” Biden told a CNN town hall in Milwaukee, adding that he was open to the idea of smaller debt cancellation through congressional legislation but not what progressives were seeking him to do through executive order.

“My point is: I understand the impact of debt, and it can be debilitating,” Biden said while pointing out that his children incurred six-figure debt after attending private universities. “I am prepared to write off the $10,000 debt but not $50 [thousand], because I don’t think I have the authority to do it.”

»PREVIOUS COVERAGE: Democrats push Biden to cancel $50,000 in student loan debt for millions

Answering a question from the audience on whether he would commit to cancel $50,000 in debt, Biden instead expressed support for making community college free and for allowing families who earn $125,000 or less to send their children to state schools for free. He also said he supported eliminating interest payments and expanding debt forgiveness programs for Americans who take public service jobs, such as teaching.

The resolution calling for $50,000 in debt relief was introduced earlier this month by Senate Majority Leader Chuck Schumer of New York and Sen. Elizabeth Warren of Massachusetts.

Such a move would have cost about $800 billion and deliver 36 million Americans out of debt, according to reports.

The Higher Education Act of 1965 authorizes the U.S. secretary of education to cancel student loans, meaning Biden could order the move, according to Warren and Schumer’s provision. However, Biden didn’t have an appetite for such a unilateral move considering the stakes of hundreds of billions of dollars that would need to be wiped off the books all at once for nearly 40 million people.

“Canceling student loan debt is the single most effective executive action President Biden can take to lift the economic prospects of tens of millions of young Americans,” Warren said recently.

All federally backed student loans have been in forbearance throughout the pandemic, and Biden extended the pause in payments and interest until Oct. 1.

Supporters of the loan cancellation plan say it would spark a wide swath of the economy, including new business, consumer spending, retirement savings, homebuying and other sectors. Critics, however, say the move would only bring a modest bump to economic activity in GDP. Republicans reportedly oppose the move.

Biden’s firm stance on debt forgiveness came as no surprise.

In previous weeks, the White House had already signaled that Congress should pass legislation to achieve it as student loan matters typically fall under federal spending set by Congress.

“The President continues to support the cancelling of student debt to bring relief to students and families,” White House press secretary Jen Psaki tweeted recently. “Our team is reviewing whether there are any steps he can take through executive action and he would welcome the opportunity to sign a bill sent to him by Congress.”