Photo: Protest in San Francisco in 2011 during the Occupy Wall Street Movement. Credit — jjinsf94115 (Flickr)
The federal government owns 92% of student debt, but President Joe Biden is refusing to cancel that debt up to $50,000 per debtor using executive action.
“I will not make that happen,” Biden responded to an audience member’s question at a Town Hall yesterday in Milwaukee. He claimed that canceling up to $50,000 of debt would only help more well-off graduates of universities like Yale and Harvard. Instead, he repeated his commitment (yet to be enacted) to cancel only $10,000, hopefully in cooperation with Congress.
The depth of the debt crisis
Biden’s hesitancy to take dramatic action on student loan debt is particularly cruel when one considers the magnitude of the problem. Student loan debt totals $1.71 trillion in the United States, and is growing at a rate six times that of the overall economy. As of the most recent data collected in 2020, 45.3 million student borrowers are in debt, owing an average of $37,691 each. The 42.9 million U.S. residents with federal student loan debt each owe an average $36,510 to the U.S. government.
The nationwide total student loan debt balance increased 8.28% in 2020, while the average student loan debt increased 4.5%. In May of last year, 9% of borrowers who attended public schools, 7% of borrowers who attended private, nonprofit institutions and 24% of borrowers who attended private, for-profit schools were behind on their loan payments.
By July, 11.2% of adults with student loan debt reported that they were unable to pay at least one student loan bill in the past year.
Fifty-eight percent of all student loan debt belongs to women. Black students are most likely to use federal loans (49.4% borrowing), and 30% of Black students will default in the first 12 years of repayment. Forty-eight percent of Black students owe an average of 12.5% more than they borrowed only four years after graduation.
Even Congressional Democrats think Biden should do more
Some democrats in Congress including Chuck Schumer, Elizabeth Warren and Alexandria Ocasio-Cortez are pushing for $50,000 of forgiveness, and asking that Joe Biden do so immediately through an Executive Order. They say Congress gave the president power to cancel student debt through the secretary of education in Section 432(a) of the 1965 Higher Education Act. Betsy DeVos used her power through this act to suspend student loan payments under the Trump administration in 2020.
Advocates for debt cancellation argue it would stimulate the economy, and could help address the racial wealth gap.
The opposing argument is that canceling student debt is a type of federal spending, and only Congress has “the power of the purse.” Opponents claim that if Biden canceled student debt without the approval of Congress, it could open him up to lawsuits and “set the tone” for an antagonistic relationship with Congress going forward. Biden’s inaction suggests that he values “unity” with the right wing in Congress (both Republican and Democrat) over the lives of the millions of working-class people struggling to survive the pandemic.
“Biden has clearly shown he has zero interest in helping students tackle the trillion plus we owe in debt collectively. We are struggling under the weight not only of this debt, but the financial limits it places on us, and a future that is unclear and dim.” Alexia Isais, an Undergraduate Student Government senator at Arizona State University and an organizer with Students for Socialism and Liberation, told Liberation: “Students are having to choose between food or rent, working extensive hours during a pandemic while going to school — all this while the interest piles up on their loans. By not forgiving student loans, Biden is only proving that he believes education is a luxury.”