Finance

Pelosi disputes Biden’s power to forgive student loans

Speaker Nancy Pelosi (Calif.) said that President Biden does not have the legal authority to unilaterally forgive federal student loans, breaking from fellow Democratic leaders.

During a Wednesday press conference, Pelosi argued that Biden can only delay or pause student loan debt by executive order, not cancel it entirely. 

“He can postpone, he can delay, but he does not have that power,” she said. “That would best be an act of Congress.”

Biden has faced steady pressure from progressive Democrats to wipe out up to $50,000 per borrower in federally held student debt through an executive order. While it’s not clear if Biden has the legal authority to do so, many prominent Democrats including Senate Majority Leader Charles Schumer (N.Y.) argue that he does.

Schumer and other debt forgiveness proponents say Biden can forgive student loans under the same legal provision former President Trump used to delay loan payments and interest accrual in March 2020 at the outset of the coronavirus pandemic. Trump-appointed Justice Department officials determined then that the president can’t forgive student debt without an act of Congress, but Biden appointees could issue a differing analysis.

Biden had expressed skepticism about his power to wipe out student loans before taking office, but has opened the door to some form of debt forgiveness order since becoming president. The White House said in the spring it was reviewing Biden’s legal options on student loan forgiveness, though the president said an eventual debt wipeout plan would not reach the $50,000 sought by progressives.

Pelosi’s comments came a day after Schumer, Sen. Elizabeth Warren (D-Mass.) and Rep. Ayanna Pressley (D-Mass.) called on Biden to extend the pause on student loan payments and go forward with debt forgiveness. All three have been pushing Biden toward debt relief since shortly after the November election and argued Tuesday that he could not afford to wait any longer with the economy still recovering from the pandemic.

“To make borrowers repay their debts now would be unfair, would be harsh, and in many instances would be cruel. People were thrown off their stride by COVID. Give them a chance to recover,” Schumer said.

Roughly 43 million Americans owe the federal government more than $1.6 trillion in student loans, and debt forgiveness advocates argue that a broad wipe-out plan would make a massive step toward narrowing inequality and the racial wealth gap.

Even so, other Democratic lawmakers have raised questions about the economic benefits and political costs of wiping out student loans without similar relief for those who did not attend college.

“Suppose your … child just decided they at this time did not want to go to college, but you’re paying taxes to forgive somebody else’s obligations. You may not be happy about that,” Pelosi said.

Tags Ayanna Pressley Charles Schumer Debt Debt relief Donald Trump Elizabeth Warren Joe Biden Nancy Pelosi Student debt student debt relief Student loan student loan relief Student loans in the United States

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