Biden Says He Is Taking a ‘Hard Look’ at Student Loan Relief
WASHINGTON — President Biden said on Thursday that he is considering wiping out some student loan debt and will make a final decision “in the coming weeks.”
“I am considering dealing with some debt reduction,” Mr. Biden said after a speech in the Roosevelt Room of the White House.
The comments were the clearest signal yet from Mr. Biden that he may make good on a promise to cancel at least some debt for student loan borrowers. During the campaign in 2020, he said he would “make sure that everybody in this generation gets $10,000 knocked off of their student debt.”
The White House has been under intense pressure to provide the relief through executive action, and Mr. Biden this month extended a pause on loan payments for a fourth time. But the president made clear that his decision would disappoint at least some progressive Democrats and advocates who argue that large-scale cancellation is necessary to address economic and racial disparities and want him to wipe out $50,000 or more per borrower.
“I am not considering $50,000 debt reduction,” Mr. Biden said. But he added that he was “taking a hard look” at debt forgiveness.
“I’ll have an answer on that in the next couple of weeks,” he said.
The timeline comes after Mr. Biden discussed the issue with members of the Congressional Hispanic Caucus this week in a closed-door meeting at the White House. Representative Tony Cárdenas, Democrat of California, said that Mr. Biden signaled he was open to debt forgiveness when asked if he would follow through on his $10,000 promise. In a statement, Mr. Cárdenas said he was glad to see Mr. Biden confirm that position.
“The burden of debt is keeping far too many Americans from financial stability, buying homes, starting families and building their futures,” Mr. Cárdenas said. “Providing debt relief to millions of Americans is the right thing to do.”
Before that meeting, the White House throughout the year had said it preferred that Congress handle student loan relief through legislation. But Senate Democrats lack the votes to help make good on Mr. Biden’s campaign promise, leaving executive action as the only pathway.
The president has in the past expressed concern that forgiving $50,000 would amount to a giveaway to well-off college graduates, a position that has led to pushback from advocacy groups.
“President Biden, we agree that we shouldn’t cancel $50,000 in student loan debt. We should cancel all of it,” said Wisdom Cole, the national director for the youth and college division of the National Association for the Advancement of Colored People, a civil rights organization. “$50,000 was just the bottom line. For the Black community, who’ve accumulated debt over generations of oppression, anything less is unacceptable.”
Republican lawmakers are firmly opposed to the idea. Senator John Thune of South Dakota, the second-ranking Republican, filed a bill on Wednesday that would block Mr. Biden from canceling student debt through an executive action and end the payment pause that began in March 2020.
“Any future suspension of federal student loan repayments should be left to Congress, not the Biden administration,” Mr. Thune said.
Even extending the payment pause has sparked some criticism from economists who say it will add to the fastest-growing inflation in 40 years. Pausing payments gives consumers more money in their pockets to buy goods during a period of constrained supply chains, fueling price hikes that have frustrated Americans.
The pressure from Mr. Biden’s supporters to act on student loans has only grown during the payment pause, as the Education Department confronts logistical challenges to restarting its payment collection system and repairing longstanding administrative failures in its repayment and relief programs.
Under Mr. Biden, the department has made piecemeal fixes that have wiped out $18.5 billion in debt for 750,000 borrowers. Its latest such effort came on Thursday, when it announced that it would eliminate the loans of 28,000 borrowers who attended the Marinello Schools of Beauty, a cosmetology chain that collapsed in 2016.
“Marinello preyed on students who dreamed of careers in the beauty industry, misled them about the quality of their programs, and left them buried in unaffordable debt they could not repay,” Miguel A. Cardona, the education secretary, said.
Student Loans: Key Things to Know
Debt reduction. President Biden said that he is considering wiping out some student loan debt and will make a final decision “in the coming weeks.” The comments were the clearest signal yet that he may make good on one of his campaign promises.
New sources of aid. The Education Department will use one-time waivers and adjustments to retroactively credit millions of borrowers with additional payments toward loan forgiveness. The move will help people seeking to have their loans eliminated under the Public Service Loan Forgiveness program and through the use of income-driven repayment plans.
Payments delayed again. President Biden pushed the restart date for federal student loan payments to Sept. 1, extending a pause put in place at the start of the pandemic. Millions of borrowers who have defaulted on their federal student loans will also get a fresh start and have their loans restored to good standing.
The cost of private loans. As the Fed changes its benchmark rate, private student loan borrowers should expect to pay more, as both fixed and variable rate loans are linked to benchmarks that track the federal funds rate.
Marinello engaged in “pervasive and widespread” misconduct, including failing to train its students properly and leaving them without instructors for periods that sometimes lasted months, the department said. Those who attended the schools from 2009 onward will be forgiven for their federal loans, totaling $238 million, through a program known as borrower defense to repayment.
In a departure from its usual practice, the department said it will automatically forgive the debts of all borrowers who attended Marinello during that period, even if they did not actually make a claim through the borrower-defense system.
The Education Department is struggling to fix the borrower-defense program, which has become the subject of lawsuits after it effectively stopped functioning for most of the Trump administration — then churned out a deluge of denial notices.
Tens of thousands of borrowers are still waiting for decisions on claims, some of which were submitted six years ago. About 200,000 applicants — including 130,000 denied by Betsy DeVos, then the education secretary, in the final year of the Trump administration — are part of a class-action lawsuit scheduled for trial this summer. The federal judge overseeing the case called Ms. DeVos’s denials “disturbingly Kafkaesque.”
Another group of applicants sued the Education Department on Monday over their long-unresolved claims. That lawsuit, filed in federal court in Boston, seeks relief for borrowers who attended the Kaplan Career Institute, a defunct school whose parent company paid $1.3 million in 2015 to settle fraud charges brought by Maura Healey, the attorney general of Massachusetts.
Ms. Healey in 2016 asked the Education Department to forgive the debts of the school’s former students, but the claim has sat undecided since then.
“Many borrowers have no idea what borrower defense is or how to apply, and so their best shot at getting relief from these predatory debts is via a group discharge,” said Kyra Taylor, a lawyer at the National Consumer Law Center, one of three groups representing borrowers in the case. “Enough is enough.”