Senator Elizabeth Warren (D-MA) and Senate Minority Leader Chuck Schumer (D-NY) continue to advocate for Democratic presidential candidate Joe Biden to exercise unilateral power as president to “cancel” billions of dollars in federal student loan debt.
In an op-ed for Blavity, Warren and Schumer suggest that cancelling up to $50,000 in federal student loans per borrower would be a good way to “jumpstart” the economy amidst the coronavirus pandemic. They also invoked “Econ 101” to make their argument.
And even if [Americans] don’t know one of our 43 million friends and neighbors buried under 1.5 trillion dollars in federal student loan debt, they understand the need to boost to our struggling economy. This is Econ 101: the best way to jumpstart our economy is to put more money in working families’ pockets — money they can spend in their communities.
Broad cancellation of student debt would give tens of millions of Americans $200 to $300 more to spend and save each month. Cancellation also means they won’t have to worry about a student debt time bomb exploding when the payments suspension ends. With more money in their pockets and a smaller debt load, they can consider bigger purchases like cars and homes and, for some, start their own businesses. That’s good for the borrower and good for our economy.
The duo, who claim Biden can accomplish the task himself, also frame the action as the “single most effective executive action available to provide massive stimulus to our economy.”
For millions of Black & brown people, student debt is now just another gigantic roadblock to building real wealth.
With the stroke of a pen on day 1, the Biden-Harris administration can right this wrong.
— Elizabeth Warren (@ewarren) December 5, 2020
According to Forbes, Warren and Schumer’s legal argument for the president unilaterally cancelling student loans is based on the idea that the secretary of education already has leeway to forgive federal student loans.
More from Forbes:
It’s unlikely, however, that Congress would grant the president unchecked, unilateral power to cancel student loans of any amount for every student loan borrower without any congressional approval. It’s more reasonable to assume that Congress granted authority to the Education Secretary to cancel student loans in limited circumstances as a procedural matter. If a president sought to cancel all student loan debt, for example, it’s more likely that Congress would have intended to retain its authority over student loan debt cancellation and federal spending.
In a recent interview with Fox News, Steve Forbes, the editor-in-chief of Forbes, blasted Warren’s suggestion that federal student loan debts should be paid off by the federal government.
“If they have this debt forgiveness of any kind of scale, we’re going to have people wondering, ‘Why should I pay those obligations? Why should I take those extra jobs? Why should I sacrifice a private university to go to an in-state university to save money and honor my obligations?’” he continued. “So, you make a mockery of people who’ve played by the rules. And this gets to the big issue, which is, why are college tuitions rising at four times the rate of inflation — the sticker price — why are they rising eight times the cash wages of working Americans?”
“It’s because universities are afflicted with bureaucratic obesity,” he added. “The very government programs, studies have shown … that are supposedly helping students, instead lead to higher tuitions. The universities get the money, they add administrative costs, and the students get stuck and their families get stuck with debt, and in some cases grants, but with higher debts. So, the universities get the money and students [get left] holding the bag. So, you got to stop that corrupt gravy train of more and more and more money going to the universities and students getting stuck with the debt.”
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