Student Loan Forgiveness Must Be Cancelled, Say 4 Congressmen
Four congressmen want wide-scale student loan forgiveness cancelled.
Here’s what you need to know.
In a letter to U.S. Secretary of Education Miguel Cardona, four Republican congressmen wrote that President Joe Biden has no congressional authority to enact wide-scale student loan forgiveness. Congressmen Tedd Budd (R-NC), Warren Davidson (R-OH), Scott Perry (R-PA) and Barry Loudermilk (R-GA) wrote that:
Student loan forgiveness: Congress has authorized limited powers
Under the Higher Education Act of 1965, Congress provided limited and explicit authority to the U.S. Secretary of Education to “compromise, waive or release any right, title, claim, lien or demand” of student loans. This includes student loan cancellation in specific cases such as for student loan borrowers with a total and permanent disability, the death of the borrower, or the closure of an college or university. Biden has cancelled nearly $10 billion of student loans since becoming president, and all Biden student loan forgiveness has been based on these limited powers. (Here’s what Biden student loan forgiveness means for your student loans). For example, Biden cancelled $5.8 billion of student loans last month for student loan borrowers with a total and permanent disability. Biden has cancelled billions of dollars more for student loan borrowers whose college or university closed or misled them through the borrower defense to repayment rule. (Find out here if you qualify for $9.8 billion of student loan forgiveness).
The president doesn’t have unlimited authority to cancel student loans
It’s no secret that Biden student loan forgiveness has been targeted student loan forgiveness. Here are 5 reasons why Biden hasn’t cancelled student loans. The authors note, that despite public rhetoric to the contrary, the Higher Education Act of 1965 doesn’t provide unlimited authority to the president. Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY), who hold law degrees, argue that the Higher Education of Act provides an unlimited power to the president to cancel an unlimited amount of student loan debt for an unlimited amount of student loan borrowers. Despite their argument for an unlimited right to cancel student loans, their proposal is for Biden to cancel up to $50,000 of student loans for federal student loan borrowers only who earn up to $125,000 annually. If implemented, approximately 36 million student loan borrowers would have all their federal student loan debt cancelled completely. To date, student loan cancellation has happened thanks to these heroes.
Student loan forgiveness: the law
The authors cite Article I, Section 9 of the U.S. Constitution, which states that, “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” In addition, Article IV, Section 3 of the U.S. Constitution grants Congress the “Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States.” The congressmen argue that under the constitutional doctrine of separation of powers, only Congress has the power to control federal spending. While Congress has appropriated money for federal student loans, Congress hasn’t appropriated money for wide-scale student loan cancellation. These would require two separate appropriations — one for the student loan and one for wide-scale student loan forgiveness of those student loans. According to the congressmen, wide-scale student loan cancellation would require an additional authorization, which Congress hasn’t approved. Biden is awaiting a legal memo on student loan cancellation from the U.S. Department of Education, but so far, that memo hasn’t been made public. The congressmen also note that in January 2021, the Education Department’s General Counsel concluded that the president and U.S. Secretary of Education aren’t permitted under law to enact wide-scale student loan forgiveness. (If you’re looking for student loan forgiveness, you can learn more here).
Student loan forgiveness: other reasons why mass student debt cancellation shoudn’t happen
The congressmen also say that:
- Benefit the wealthy: Wide-scale student loan forgiveness would most benefit wealthy student loan borrowers. For example, approximately 50% of student loan debt is for graduate school, which is mostly associated with student loan borrowers who, on average, are higher wage earners.
- Most Americans don’t have student loans: Most Americans don’t have student loans or never went to college. There are 45 million student loan borrowers, which means that approximately 80% of adult Americans don’t have student loans. This alone isn’t a reason to oppose student loan cancellation, per se, but it highlights the potential unfairness of asking these individuals who didn’t attend college or already paid their student loans to now pay student loans for others.
- Paying back previous student loan borrowers: The congressmen ask whether student loan borrowers who already paid their student loans will get a refund if there is wide-scale student loan forgiveness. Many student loan borrowers saved money for years, sacrificed financially and worked multiple jobs to pay for college and repay student loans. Will they get any student loan forgiveness retroactively? So far, based on proposed legislation in Congress, the answer is “no.” If you already paid student loans, you wouldn’t get a refund if there is wide-scale student loan forgiveness.
“Congress has not authorized the Secretary to provide mass cancellation of student loans,” the congressmen wrote. “I ask for your commitment that you will not seek to usurp the will of the people and the authority Congress has delegated in cancelling student debt beyond what the law clearly allows.”
Student loans: next steps
Will your student loans get cancelled? Student loan cancellation may help more student loan borrowers, but that doesn’t mean Biden will cancel everyone’s student loans. It’s not surprising that these four Republican congressmen shared these policy perspectives. Republicans in Congress don’t support wide-scale student loan forgiveness. Many Democrats in Congress don’t support wide-scale student loan forgiveness either. Importantly, these congressmen don’t oppose all student loan cancellation either. They agree that Biden has legal authority, on a limited basis, to enact targeted student loan cancellation. Speaker of the House Nancy Pelosi (D-CA), who doesn’t agree politically with any of these congressmen, agrees with them on student loan cancellation. Pelosi said explicitly that the president doesn’t have the power to enact wide-scale student loan cancellation; only Congress does. To date, Congress has not passed any legislation on wide-scale student loan cancellation. While Biden will continue to cancel student loans on a targeted basis, there doesn’t appear any indication that wide-scale student loan cancellation is forthcoming.
Given the low likelihood of wide-scale student loan forgiveness, make sure you understand all your other options for student loan repayment. Here are some popular ways to save money:
- Student loan refinancing (get a lower interest rate + lower monthly payment)
- Income-driven repayment plans (get a lower monthly payment)
- Public service loan forgiveness (get student loan forgiveness)