Seniors Minority Chairman Chuck Schumer continues to press President-elect Joe Biden to cancel up to $ 50,000 in student debt per borrower on the first day of his presidency.
"We have come to the conclusion that President Biden can undo this debt and on the first day he becomes president, can cancel debt of $ 50,000," said Schumer on Monday in front of his office in Midtown Manhattan. "You don't need a congress. All you need is the movement of a pen."
More than 40 million Americans have a lot to do with whether or not a president can cancel student debt without Congress. Borrowers' debts could be reduced or eliminated overnight if the president were able to act without legislation. However, Congress is unlikely to agree to grant the loans, if at all.
At the moment it is also an open question whether Biden is interested in testing his power as president in this way.
More from Personal Finance:
Depositors are having trouble getting money back from the Beam banking app
Here's how much your 401 (k) Match business will be worth
Personal Finance 101: The Complete Guide to Managing Your Money
During the 2020 Democratic Presidential Primary, Massachusetts Senator Elizabeth Warren vowed to grant student loans in the first few days of her tenure, including her announcement of an analysis written by three legal experts as part of the student predatory loan project at Harvard Law School. who described such a move as "lawful and permissible".
Biden didn't go that far, however.
A spokesman for the President-Elect would not say whether Biden has taken a stance on whether or not he can cancel student debt without Congress by pointing out comments Biden made at a recent press conference after being asked if he was the executive would take action to terminate the loan.
"You are in real trouble," Biden said of student loan borrowers. "You have to make a choice between paying your student loan or paying your rent. These types of decisions should be made immediately."
Biden announced that he would cancel all borrowers' debts of $ 10,000 for students 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. Overall, according to calculations by university expert Mark Kantrowitz, this would reduce the number of outstanding student loans of $ 1.7 trillion by about a third.
Biden is under increasing pressure to go further amid the pandemic.
More than 230 organizations and nonprofits, including Americans for Financial Reform, the NAACP, and the National Consumer Law Center, signed a letter on Nov. 18 asking Biden to cancel student loans on his first day as president.
A poll found that 58% of registered voters support student loan making and around 840,000 people support a Change.org petition entitled "Donald Trump / Joe Biden: Delete Student Loans!" Have signed.
The legal arguments about whether or not a president cannot pay the debt quickly get complicated.
CNBC asked Toby Merrill, founder and director of the Predatory Lending Project at Harvard Law School, how she would explain to a 15-year-old why she believed it was in the power of the president to do so.
"The Constitution gave Congress the power to control government property and debt owed to it," she wrote.
And Congress, Merrill said, gave the education secretary who works for the president "specific and unrestricted authority to create and cancel or modify debts owed under federal student loan programs."
The same question was put to Luke Herrine, Ph.D. Yale Law School candidate who first argued in 2017 that the US Department of Education could cancel student debt.
"Basically, it's like the power a prosecutor must have in deciding whether to bring charges against someone – the prosecutor might think a person has committed a crime but decide not to bring them to trial for whatever reason to initiate, "said Mistress.
In other words, the president could work with the U.S. Department of Education to stop student loan collection, proponents of the argument say.
Others are not so confident.
"The use of an executive regulation to grant federal student loans is likely to be punished with a lawsuit and an injunction and will eventually fail," said Kantrowitz.
"Also, attempting this route immediately after taking office would block any attempt to work bipartisan with Congress," he added.
Ryan D. Doerfler, a law professor at the University of Chicago, can also see that such a move is overcome by a myriad of challenges. For example, opponents might say that the US Department of Education can only provide relief to borrowers under certain circumstances.
However, these potential obstacles shouldn't prevent the president from trying, Doerfler said.
"Congress doesn't seem interested in taking such steps at all," he said, "and it is better to pursue debt relief through executive action than to pray for Mitch McConnell to change his mind."
The legal battle aside, other college anniversary critics say it wouldn't give the economy a major boost, as college graduates tend to be higher-income individuals who would likely redirect their monthly bills towards savings rather than spending.
Merrill disagrees, pointing out that student loan borrowers had problems before the pandemic.
In fact, more than one in four student loan borrowers were either late or late when the country was in the midst of its longest economic expansion in history and unemployment was at half a century lows. Research has shown that the loans make it difficult for Americans to buy houses and cars, start businesses and families, save or invest. The country's outstanding student loan balance is projected to grow to $ 2 trillion by 2022, and experts say a large chunk of that is likely to never be paid back. All of that before the pandemic.
"People affected by the coronavirus, whose income has been cut, or who are hourly workers are struggling under the burden of student loan debt," Merrill said.
The U.S. Department of Education has given people the option to pause their student loan payments until February 2021. Almost all borrowers have taken advantage of this: Less than 11% of those with federal student loans are paying their bills during the Kantrowitz pandemic. In a recent Pew survey, 58% of borrowers said it would be difficult for them to resume payments in the coming month.
Despite its benefits, some say that student loan forgiveness would create a backlash among those who haven't attended college, taken out loans, or already paid off their student debts. These borrowers "may feel that their frugality is being punished," Bloomberg columnist Noah Smith wrote recently.
Mistress resisted this argument.
"It's like saying that providing a Covid vaccine is unfair to those who caught Covid before the vaccine," he said.
Would you be in favor of President-elect Biden forgetting $ 50,000 in student debt for borrowers? Why or why not? Send me an email at firstname.lastname@example.org