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As president, Elizabeth Warren can direct the secretary of education to implement her existing plan to cancel some or all student debt for up to 95 percent of borrowers.
This story is part of the Prospect’s series on how the next president can make progress without new legislation. Read all of our Day One Agenda articles here.
Senator Elizabeth Warren, who has focused much of her campaign on kitchen-table finances, announced today that she would commit to canceling student debt through existing executive authority on day one.
The proposal, outlined on her campaign website this morning, is based on a provision in the Higher Education Act that gives the Department of Education the ability to modify, compromise, waive, or release student loans. This is commonly called “compromise and settlement.” I wrote about this power as part of the Prospect’s series The Day One Agenda.
“The future of our economy and the lives of a generation of student loan borrowers are at risk, and I’m committed to seeing this fight through no matter what,” Warren wrote in her post.
As president, Warren can direct the secretary of education to implement her existing plan to cancel up to $50,000 in student debt for roughly 95 percent of borrowers—about 42 million Americans. Her plan is less robust than Senator Sanders’s proposal to cancel all $1.6 trillion in student debt, but Sanders has not fully committed to doing it through executive action.
In the proposal, Warren notes that other government debt cancellation programs—a whole menu of them—already exist, but few are fully deployed, leaving thousands stranded. To fix this, she promises to simplify the process, cutting through complicated red tape and opt-in requirements. As I previously wrote, some of these programs are so complicated, you would need a lawyer to navigate them yourself. Warren says she would engage in “affirmative outreach to borrowers” as well as use “available data to match borrowers with their discharge options.” Warren also provides for protection for borrowers from additional tax liability when the debt is forgiven, a complication with this kind of debt forgiveness plan that would essentially mean that your debt would be funneled in part from the Education Department to the IRS.
For the publication of the Day One Agenda, the Prospect sent a questionnaire to every campaign, asking if they would commit to canceling student loans using existing authority. At the time, Warren demurred, saying that she was “committed to determining whether some or all of that cancellation can be accomplished administratively.” Senator Sanders responded that, should Congress refuse to back his proposed legislation canceling student debt, he would “explore other available avenues to relieve existing student debt.” But neither seemed wholly committed to the idea, which would dramatically speed up debt relief. That changed with today’s announcement.
In order to bolster her claims to legality on this issue, Warren included a letter from three legal authorities on student debt at the Project on Predatory Student Lending, a part of the Legal Services Center of Harvard Law School. They write that the power Warren now proposes using “was contained in the HEA from its initial enactment.” The only limitation is that the secretary can’t settle any claim of over $1 million without a review by the attorney general. But if Warren appoints the right attorney general, this problem can also be overcome. The secretary of education has the power, according to these experts, to modify loans—even to zero and even in the absence of implementing regulations. This is even permissible under the budgetary standards that govern the student loan programs, the letter states.
Deanne Loonin, one of the signatories to the memo, wrote a memo on the subject to the Obama administration way back in 2015, in the midst of the for-profit college crisis. Loonin and Robyn Smith outlined this same power to then-Secretary Arne Duncan, but the administration declined to pursue that option, instead opting for several less-comprehensive programs of debt relief for defrauded borrowers with a lot more red tape. That choice meant that some defrauded borrowers are still paying off their debt, unable to get relief.
Luke Herrine, a Ph.D. student in law at Yale, wrote a legal article outlining the same power that Warren and her legal experts now cite as the basis for her latest plan to cancel student debt. In an interview, Herrine noted that this authority isn’t something the courts can question. Simply put, the Department of Education has the power to decide not to collect on student loans—something they do all the time through existing federal debt forgiveness programs. This plan expands that power to millions of borrowers.
In comment after Warren’s new plan was made public, Herrine noted that it’s important to understand that Warren’s announcement will “change the nature of the debate in the presidential primary and beyond.” It’s no longer possible for someone to be an expert in student debt without understanding the ways a president can address the crisis through existing executive authority. “None of this would be on the table without an organized movement of student debtors who demanded cancellation when nobody ‘serious’ took that idea seriously,” Herrine wrote in an email.
Student debt is so corrosive, Warren notes, that a significant portion of “students who entered repayment on their loans in 2011 had not paid even a dollar toward their loan principal after 5 years.” It’s now the second-highest form of debt in the nation, rivaled only by mortgage debt.
Warren’s plan emphasizes that even this massive student loan forgiveness plan wouldn’t fix everything that’s wrong with higher education. For one thing, one-time loan forgiveness does nothing to stop unfettered tuition increases and inequitable college attendance. Warren reiterates her commitment to making public college and technical school tuition-free and increasing support for “HBCUs and Minority-Serving Institutions” to help “close the racial gaps.” And she hasn’t changed her mind on banning for-profit colleges’ access to federal student aid, often the only way these predatory institutions survive. Warren fought for debt relief for borrowers cheated by for-profit Corinthian Colleges.
What this reveals most is Warren’s willingness to push the limits of executive authority to advance progress on issues she cares about. Student debt has prevented young people from buying homes and starting businesses. In other words, student loans keep borrowers from living their lives. Warren’s plan could change that. And if Congress doesn’t agree, she has committed to pulling the necessary regulatory levers to get it done.
