Can Joe Biden forgive student debt without Congress? Here’s what the experts say

It’s a pressing question not just for higher-education experts and legal wonks. Tens of millions of Americans have a lot riding on the answer: Can the president forgive student debt without Congress?

If the president was able to cancel student debt without passing legislation, in theory borrowers could see their balances reduced or eliminated overnight. On the other hand, the chances of Congress agreeing to forgive the loans is, at best, uncertain. Generally, Republicans are not in favor of debt forgiveness.

For now, it’s also an open question if President-elect Joe Biden has interest in testing his presidential power in this way.

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During the 2020 Democratic presidential primary, Massachusetts Sen. Elizabeth Warren vowed to forgive student loans in the first days of her administration, including with her announcement an analysis written by three legal experts, based at the Project on Predatory Student Lending at Harvard Law School, who described such a move as “lawful and permissible.”

Biden, however, has not gone as far.

A spokesman for the president-elect wouldn’t say if Biden has taken a stance on whether or not he can forgive student debt without Congress, through he pointed to remarks Biden made at a recent press conference after he was asked if he would take executive action to cancel the loans.

“They’re in real trouble,” said Biden, about student loan borrowers. “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 said he would forgive $10,000 in student debt for all borrowers, and the rest of the debt for those who attended public colleges or historically Black colleges and universities and earn less than $125,000 a year. In all, that would slash the country’s $1.7 trillion outstanding student loan tab by about a third, according to calculations by higher-education expert Mark Kantrowitz.

Biden is under increasing pressure to go further.

Sen. Chuck Schumer, D-N.Y., and Warren in September called on the next president to forgive $50,000 in student loans for every borrower as soon as he entered the White House. In an interview earlier this month with The.Ink, Schumer said Biden could cancel the debt “with the pen as opposed to legislation.”

More than 230 organizations and non-profits, including Americans for Financial Reform, the NAACP and the National Consumer Law Center, signed a letter on Nov. 18, calling on Biden to cancel student loans on his first day as president.

“To minimize the harm to the next generation and help narrow the racial and gender wealth gaps, bold and immediate action is needed to protect student loan borrowers,” the groups wrote.

The student loan crisis has been particularly painful to Black borrowers, with nearly 85% of Black college graduates carrying education debt, compared with 69% of White college graduates. And due to racial wealth and income inequities in the U.S., Black borrowers suffer higher default rates and are also stuck in debt much longer than their White peers. Meanwhile, two-thirds of the country’s outstanding student loan debt is carried by women.

Even before the pandemic, when the country was in the midst of its longest economic expansion in history and unemployment levels were at half-century lows, more than 1 in 4 student loan borrowers were either in delinquency or default. One survey found that 58% of registered voters are in support of student loan forgiveness and over 820,000 people have signed a Change.org petition titled, “Donald Trump/Joe Biden: Erase Student Loans!”

The legal arguments around whether or not a president can nix the debt get complicated, fast.

CNBC asked Toby Merrill, founder and director of the Project on Predatory Student Lending at Harvard Law School, how she’d explain to a 15-year-old why she believes it’s within the president’s power to do so.

“The Constitution gave Congress the authority to control property of the government, like debts owed to it,” she wrote.

And Congress, Merrill said, granted the Secretary of Education, who works for the president, “the specific and unrestricted authority to create and to cancel or modify debt owed under federal student loan programs.”

The same question was posed to Luke Herrine, a Ph.D. candidate at Yale Law School, who first made the argument in 2017 that the U.S. Department of Education could cancel student debt.

“Basically it’s like the power that a prosecutor has to determine whether to bring charges against somebody – the prosecutor might think that a person has committed a crime but decide not to bring a case against them for whatever reason,” Herrine said.

In other words: The president could collaborate with the U.S. Department of Education to stop collecting on people’s student loans, proponents of the argument say.

Others aren’t confident that bypassing Congress to cancel the debt would be successful.

“Using an executive order to forgive federal student loans will likely be met with a lawsuit and preliminary injunction, and eventually fail,” Kantrowitz said.

“Also, trying that route immediately upon taking office would block any attempt at working with Congress in a bipartisan manner,” he added.

Ryan D. Doerfler, a law professor at the University of Chicago, can also see such a move being met by a myriad of challenges. For example, he said, opponents may say that the U.S. Department of Education can deliver relief to borrowers only in specific circumstances.

Yet those potential obstacles shouldn’t prevent the president from trying it, Doerfler said.

“Congress seems wholly uninterested in taking such steps,” he said, and so, “better to pursue debt cancellation through executive action than pray for Mitch McConnell to have a change of heart.”

Beyond the legal tussle, other critics of a student debt jubilee say it wouldn’t significantly stimulate the economy because college graduates tend to be higher earners who would likely redirect their monthly bill to savings rather than spend more.

Merrill disagrees.

Borrowers need help now more than ever, she said.

“People affected by the coronavirus, people whose income has been cut off or are hourly workers, are struggling under the burden of student loan debt,” Merrill said.

The U.S. Department of Education offered people the option to pause their student loan payments until January. Almost all borrowers took it: Less than 11% of those with federal student loans are paying their bills during the pandemic, according to data analyzed by Kantrowitz. In a recent Pew survey, 58% of borrowers report that it would be difficult for them to resume making payments in the coming month.

Despite its advantages, some say sweeping forgiveness would spark a backlash among those who didn’t attend college, didn’t take out loans or have already paid their student debt off. Those borrowers “might feel that their frugality was being punished,” Noah Smith, a columnist for Bloomberg, wrote this month.

At that argument, Herrine bristled.

“That’s like saying providing a COVID vaccine is unfair to those who caught COVID before the vaccine,” he said.