Manuel Balce Ceneta/AP Photo
President Joe Biden speaks at Brookland Middle School, September 10, 2021, in Washington.
On the campaign trail, Joe Biden was unequivocal. As president, he would cancel $10,000 in student debt for each of the roughly 37 million Americans who owe federally backed student loan payments, as well as fix broken payment programs that would reduce outstanding costs for all borrowers. That was a substantially lesser commitment than the other Democratic front-runners, who had advocated for wiping out all or nearly all student debt. But it was notable all the same, not least because the president could cancel student debt without the help of Congress.
As of late, Biden has begun to make good on the promise to fix existing payment programs. But his commitment to student loan debt cancellation has waned. While Senate Majority Leader Chuck Schumer and House progressives pushed for canceling $50,000 of debt per person, Biden shirked his own authority to even make good on the $10,000. And now, according to Politico, the administration is no longer just slinking away from loan cancellation, but actively drawing up plans for the resumption in January of federal student loan payments, which have been frozen since March 2020, nearly two years ago.
According to that report, the Biden Department of Education, helmed by Secretary Miguel Cardona, is “considering proposals” for how to restart the payments. But it has not yet taken steps to solidify protections for the millions of struggling federal student loan borrowers who are at risk of the harshest consequences of default. Among the proposals being considered is the reinstatement of paperwork requirements for debtors in default, currently suspended thanks to pandemic policy. The return of that requirement could sweep the 7.3 million borrowers who were in default as of March 2020, all of whom are currently eligible to exit that status thanks to the CARES Act and its extension, back into default on an administrative technicality alone. “It has us deeply, deeply worried,” said Mike Pierce, policy director of the Student Borrower Protection Center. “It would be a real missed opportunity and real betrayal for these borrowers.”
The administration is no longer just slinking away from loan cancellation, but actively drawing up plans for the resumption in January of federal student loan payments.
More than a quarter of student loan holders were past due or in default at the onset of the pandemic, part of a broader student debt crisis that has ballooned to $1.7 trillion. Those problems were inherited by Biden, who inherited them from President Trump, who inherited them from President Obama before him, and so on.
But Biden, thanks to the passage of the CARES Act in March 2020, inherited additional authority far beyond his predecessors’ to deal with this crisis. CARES initially froze all student loan payments for six months, and gave borrowers credit for every month of the freeze as a month where necessary payments were made, while waiving any requirement of paperwork filing to get credit for that payment. Trump then extended that freeze in September 2020, and Biden again on two occasions.
To get out of default, borrowers have to make nine payments of any amount over ten months, a show of good faith that they’re trying to make payments. With Trump’s extension pushing the payment freeze to the ten-month mark, and Biden subsequently extending it further, all 7.3 million borrowers became eligible to exit default. With the formal waiving of a paperwork filing requirement, then, all borrowers in default would be relinquished from that status, and able to start anew. “Biden could’ve done this on his first day,” said Pierce. “He can just wave the wand.”
But the administration has signaled that they’re still considering whether or not to reinstate the paperwork requirements. If the requirements are missed or filed incorrectly, it would plunge any of those 7.3 million right back into default, where they would return to a period of wage garnishment and seizure of payments from public anti-poverty programs and Social Security.
As it stands, the federal government seizes back billions of dollars of Earned Income Tax Credit money, one of the country’s farthest-reaching anti-poverty programs, from borrowers in student debt default every year. Borrowers in default are among the most vulnerable in the country, overwhelmingly low-income people of color, including those who have been defrauded by for-profit universities. “We were really surprised to see that this was even up for debate,” added Pierce. “It’s the barest minimum.”
Waiving the paperwork requirement and getting those defaulted borrowers out of debt would represent a rare opportunity to reset the clock for some of the most hopelessly indebted in the United States. It would also improve millions of credit scores and afford people access to other protections in the social safety net that being in default locks them out of. And yet the administration has not yet committed to this move, despite having ample authority to do so.
More than a quarter of student loan holders were past due or in default at the onset of the pandemic, part of a broader student debt crisis that has ballooned to $1.7 trillion.
Some activists had hoped that President Biden simply wouldn’t restart student loan payments at all, or continue to defer the restart indefinitely, building on those previous extensions over the past two years.
Instead, President Biden is forgoing an established authority to ameliorate some of the most acute effects of the student loan crisis, a move not unfamiliar to those activists, who have seen him pull the same move on debt relief. While there’s little uncertainty among advocates and experts that Biden has the executive authority to cancel an expansive amount of student debt, he’s repeatedly refused that interpretation, kicking responsibility to Congress while requesting a legal memo on the subject from the Department of Education. That memo, which was expected to be produced immediately, still remains missing in action, despite having been requested six months ago.
That isn’t to say that the administration has done nothing on student debt. They’ve enacted the first meaningful reforms to the maligned Public Service Loan Forgiveness program, which will result in between $2 billion and $5 billion in loan forgiveness right away, and potentially much more in the years to come. But the administration has the authority to do much, much more for the country’s neediest with the proverbial pen stroke. So far, the president has been unwilling to do so. And elsewhere, in his Department of Justice, Attorney General Merrick Garland has continued to fight for Trump Education Secretary Betsy DeVos’s elevated standards for loan forgiveness for defrauded borrowers, the galling “borrower defense” rules that only a president with his own fraudulent, for-profit university could love.
That, combined with the disappearance of tuition-free community college from the Build Back Better Act, a development relayed by the president himself, adds up to a grim picture of Biden’s priorities on higher education. Tuition-free community college, which already exists in a number of states, is another small-bore commitment that even President Obama had touted as an ambition during his second term. Abandoning that, plus debt cancellation, plus even more minor protections for student loan holders, has added up to a strong case that the administration has turned its back on young Americans looking to higher education.
That could prove to be a political miscalculation. The record turnout of young voters proved an absolutely essential demographic for Joe Biden’s electoral victory last November. And while much of the Build Back Better package as it was initially conceived was focused on youth—child care, universal pre-K, the Child Tax Credit—Biden has caved to fellow Democrats who are showing a willingness to spurn those young people who are old enough to vote. Combined with the abandonment of police reform after the youth-led George Floyd protests and the withering of the climate commitment in the BBB, the administration has almost tailor-made its agenda to alienate the young voters it so desperately needs.
