Democratic Senators Split On Wiping Out Student Loan Debt

Democratic senators are split on whether President-elect Joe Biden should move unilaterally to wipe out student debt upon taking office, a possible reflection of both how far progressives are from persuading the incoming administration to fully embrace their agenda and how uncertain the party is about what Biden will be able to accomplish. 

Sen. Elizabeth Warren (D-Mass.) and Senate Minority Leader Chuck Schumer (D-N.Y.) have both pushed for Biden to instruct the secretary of education to wipe out billions of dollars worth of student debt ― up to $50,000 per borrower ― on his first day in office, aiming to provide an immediate jolt to an economy still sputtering its way through the coronavirus pandemic. Eleven other Senate Democrats have backed Schumer and Warren’s resolution.

It’s unknown if Biden, who has embraced a more limited vision of reducing student debt as part of a legislative proposal to fire up the economy, views their plan as legally feasible, politically smart or good policy. With control of the Senate still unsettled and with Senate Majority Leader Mitch McConnell (R-Ky.) so far declining to acknowledge Biden’s victory, the feasibility of many of Biden’s boldest proposals remains up in the air. (Republicans are set to have a majority in the upper chamber next year unless Democrats can sweep a pair of January runoff elections in Georgia.)

The intra-Democratic argument over eliminating student loan debt ― and more broadly about pursuing unilateral action on the economy ― is likely to recur again and again during Biden’s administration, with progressives arguing that bolder action will improve the economy and spur enthusiasm for Democrats and moderates fretting about alienating persuadable centrist voters.

Eliminating student loan debt is not the only way progressives are pushing for Biden to stimulate the economy on his first day in office, with or without Congress’ help. In a Washington Post op-ed published last week, Warren also suggested that he move to lower prices for prescription drugs; declare a national emergency on climate change, which could free up money for green energy projects; and raise the minimum wage to $15 for employees of federal contractors. 

“I think he should lead off with the mother of all executive orders to clear the decks for the work that needs to follow,” said Sen. Sheldon Whitehouse (D-R.I.). “The more he can clear with an early executive order, the quicker we can work together on other bipartisan or controversial issues.”

Sen. Angus King, a Maine independent who caucuses with Democrats, was far more skeptical and suggested that Biden should focus instead on renewing Trump-era suspensions of student loan payments that are set to expire in the new year.

“That would have enormous fiscal consequences,” King said of eliminating student debt. “I don’t think forgiveness altogether [makes sense].”

But it was Sen. Bob Casey (D-Pa.), a close ally of Biden’s, who may have best summed up the dilemma facing the incoming president.

“I think it’s preferable to do something that’s bipartisan but statutory,” Casey said, echoing Biden’s own wish to work with congressional Republicans. Then the senator quickly followed up by embracing progressives’ overall goal: “If he has the authority, sure. That would be great for a lot of students.”

During a press conference Monday, Biden answered a question about student debt relief by reiterating the position he has held since March: He supports legislation to immediately forgive $10,000 worth of debt per person and to eliminate all undergraduate student debt for people who make less than $125,000 a year and who attended public or historically Black colleges and universities.

“It’s holding people up,” Biden said of young adults dealing with debt. “They’re in real trouble. They’re having to make choices between paying their student loan and paying the rent, those kinds of decisions. It should be done immediately.”

Biden has also proposed making public colleges tuition-free for families with incomes of less than $125,000 a year, expanding Pell Grants for low-income students, fixing the federal government’s massively dysfunctional loan forgiveness program for those with public service jobs, and creating more generous income-based repayment plans for student loan borrowers. 

Roughly 45 million Americans have a combined $1.5 trillion worth of student debt, owing a median amount of $17,000 with a median payment of just over $200 a month. The nation’s collective debt burden has grown in recent years, the result of both cuts in state support for public universities and spiraling administrative costs. The crisis has exacerbated the racial wealth gap, with Black students often borrowing far more than their white counterparts.

Progressive groups are eyeing Biden’s actions on student loans as an early test, suggesting action would amount to a “show of good faith,” in the words of Progressive Change Campaign Committee co-founder Adam Green. 

“Mitch McConnell has a vested interest in keeping Joe Biden’s accomplishments low so that enthusiasm and popularity is low headed into the midterms,” Green said. “But something bold ― like forgiving student debt during this coronavirus crisis ― could capture the imagination of voters and put Democrats firmly on the side of regular people, which is where the Biden administration wants to be.” 

On the other hand, Lanae Erickson, a senior vice president at the moderate Democratic group Third Way, said the party should be wary of focusing on aid for the college-educated ― which she said could further alienate working-class voters drifting away from the party and do little to help the most vulnerable.

“It’s clear the education gap is bigger than ever. If Democrats want to win back non-college voters in the future, then spending all of your political capital on helping people with higher education isn’t a smart idea,” Erickson said. “It will only reinforce the perception that Democrats only care about the elite.” 

Public surveys have generally shown narrow majorities or pluralities of Americans in favor of wiping out student debt, with results often depending on a pollster’s specific wording.

Progressives are skeptical that there would be widespread backlash from voters without a college degree, arguing that any plan to wipe out student debt would likely be paired with other actions to boost the broader economy. Warren and Schumer’s resolution calls for the president to make sure the benefits don’t accrue to the “wealthiest” borrowers.

Most Democrats did not question whether Biden’s administration would have the ability to unilaterally act on student debt. Warren and other supporters of the idea have long said the secretary of education has broad authority over loans and noted the Trump administration relied on that authority to suspend interest and payments during the pandemic. 

Republicans are far more skeptical that Biden could unilaterally wipe out student loan debt, a proposal they generally oppose. 

Sen. Mike Crapo (R-Idaho), who chairs the Senate Banking Committee, questioned “the legal argument” that a president has for forgiving student loan debt via executive order. Sen. Marco Rubio (R-Fla.) called student loans “a big problem in this country,” but expressed caution about doing something that could have “unintended consequences.”

Sen. Pat Toomey (R-Pa.), another Banking Committee member, said he flatly opposed forgiving student loans.

“What about all the other categories of debt that would not just be forgiven? What about the fact that some kids that borrow money come from very affluent families? You’re going to forgive their loans too? That doesn’t make sense to me,” Toomey told HuffPost.

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