Calls for student loan cancellations set to intensify as Biden’s legislative agenda stalls

President Joe Biden’s ambitious social spending and climate change legislative agenda, the Build Back Better Act, seems unlikely to pass as originally written after the moderate Democratic Senator from Virginia -Western Joe Manchin declared his opposition days before Christmas and reiterated this week that there are no ongoing discussions on the bill.

While it’s possible the Democrats could muster their razor-thin margins in the House of Representatives and Senate to pass some sort of streamlined spending bill, it’s almost certain that Biden will either do so this year or after a probable loss of the House after November. elections, look to regulatory changes as the main vehicle for its political vision.

“While Biden will seek to materialize a version of his Legislative Build Back Better agenda, he will seek to motivate his party base ahead of the midterm elections with victories that require no action from Congress,” wrote analysts at Beacon Policy Advisors. , in a note to clients this week.

The Biden administration has not shied away from using executive power to implement its economic agenda. For example, he raised the minimum wage for federal contractors to $ 15 an hour, while federal agencies ranging from the Federal Trade Commission to the Department of Agriculture embark on a nation-wide antitrust policy review. administration.

But there are few other policies that could motivate Biden’s base more than canceling the student loan, given that voters with college degrees are backing Biden as president. in many more than voters without a diploma.

Senate Majority Leader Chuck Schumer, the New York Democrat, has consistently urged Biden to use executive power to write off up to $ 50,000 per student in federally backed student debt, a move that would add 1 trillion dollars in the long-term budget deficit, according to the Brookings Institution. (However, this would not increase the national debt, as the debt has already been issued in order to create the loans in the first place.)

Biden said he didn’t think he had the legal authority to write off student loans by executive order, and said he would rather Congress allow $ 10,000 in debt forgiveness per student. Earlier this year, White House officials said they were examine Biden’s legal authority to cancel student debt through executive action.

Legal experts say there is no clear answer as to whether the president has the power to cancel a student loan. Opponents of the policy say it would violate the Constitution’s credit clause and the 1982 Anti-Deficiency Act, which prohibits the executive from spending money without congressional authorization.

Proponents of the policy say these provisions do not apply to student loan cancellation because Congress has authorized the spending and federal law gives the Secretary of Education broad authority to decide how and if debt repayments must be collected.

“Everyone agrees that the Secretary of Education has the authority to adjust federal student loans,” Harvard University law professor Howell Jackson wrote in an April article in regulatory review. The debate centers on the precise meaning of the provisions of the Higher Education Act of 1965 which give the secretary the power to ‘consent to the modification’ and to ‘compromise, waive or discharge’ amounts owed on certain student loans. “

When Biden and House Speaker Nancy Pelosi, a Democrat from California, say they don’t think the president has the legal power to write off student debt, they’re referring to interpretations of the HEA and other laws relevant. But a more important question, according to some proponents of the policy, is whether there would be any recourse for opponents of the policy to arrest the president if he pursued it.

“Lawsuits challenging student administrative debt would likely fail,” according to a recent memo released by Massachusetts Democratic Senator Elizabeth Warren, adding that it would be difficult for any person or state to prove that they were wronged by the political, a necessary step for complainants to obtain standing in federal court.

Jackson argued in a Harvard Law School backgrounder that companies the federal government hires to manage federal student loans could likely have standing if they wanted to sue the government. He noted that the federal government was set to pay out about $ 1.1 billion to student loan managers last year, and the loss of that revenue could prompt these companies to take legal action to block the loan. delivery.

Warren’s memo, however, argued that the courts are unlikely to remedy the losses of these businesses by blocking the pardon altogether. “Even though a person or entity could successfully argue that they had standing, they were in a way
wronged, and that they have a right to a legal remedy – no person or entity could reasonably argue that the remedy for their legal action should be to keep tens of millions of student loan borrowers in debt indefinitely, “it reads. .

Even if political considerations take precedence over the law, it is not clear that the Biden administration is enacting the cancellation of student loans by executive order, according to Beacon research analyst Charlotte Jenkins.

“Biden has expressed skepticism about general forgiveness allowing students who have attended elite institutions to be relieved and likely feared a backlash from angry voters who have already paid off their own student loans or who have not chosen to pursue higher education because of the cost, ”she wrote in a Friday note to clients.

“This dilemma is exacerbated by the fact that, thanks to the action of the executive, it is more difficult to implement means-tested forgiveness which could make forgiveness more acceptable to the moderates and the millions of passers-by. blues that Biden uses as a litmus test for presidential action, ”Jenkins said.

“The impending midterm elections will keep postponement and forgiveness on the agenda as the Democratic Party debates the political consequences of each outcome,” Jenkins wrote.

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