Biden promise to forgive $10,000 in debt remains unfulfilled

Joe Biden’s 2020 presidential campaign website said that a president would forgive Biden “at least $ 10,000 per person in federal student loans,” eliminating all student debt for 15 million of the nearly 45 million American borrowers.

Almost six months after his presidency, that promise remains unfulfilled.

A blurb from the Biden 2020 campaign website. (JoeBiden.com)

The Biden government has taken some targeted steps to cancel certain borrowers’ debt, and the pandemic suspension of federally sponsored debt payments will result in total student loan relief of around $ 100 billion between March 2020 and September 2021.

Prominent Democrats, meanwhile, continue to urge a skeptical President Biden to enact a large-scale cancellation of up to $ 50,000 through executive action (contrary to the laws passed by Congress).

“Many Americans voted for President Biden because he promised to provide direct aid to those in need – and now is the time to act,” said US Senator Elizabeth Warren (D-MA) in one Statement to Yahoo Finance administration to address student debt crisis by canceling up to 50,000 student debt as it is vital to our economic recovery. “

The White House did not respond to requests for comment.

Biden endorsed the May 2020 plan to “Provide $ 10,000 Immediately in Debt Relief”.

The then candidate Biden called for student loans to be waived several times in 2020.

On March 22, days before Congress passed the $ 2.2 trillion Coronavirus Relief, Relief, and Economic Security Act (CARES), Biden tweeted that the federal government should “provide at least $ 10,000 per person in federal student loans “.

In May 2020, Biden told The Late Show with Stephen Colbert that he supported a proposal to “provide $ 10,000 debt relief immediately as a stimulus – now for students.”

In October 2020, Biden told the CNN City Hall questioner, “I’m going to make sure everyone in this generation gets $ 10,000 off their student debt if we try to escape this goddamn pandemic.”

The story goes on

The pitch was popular: two national polls from December 2020 showed that more than half of Americans across the political spectrum support student loan issuance.

“[Biden] made it very clear that he wanted to cancel at least $ 10,000 during the campaign, and he made the election promise in several places, both physically and in his campaign materials, “said Persis Yu, director of the National Consumer Law Center’s Student Loan Assistance Project. told Yahoo Finance, “It was a prominent part of his campaign promise, not one of those buried on page 45 of all the documents … and it was certainly one that student loan borrowers are eager to deliver on.”

U.S. Democratic presidential candidate and former Vice President Joe Biden speaks to supporters at a campaign rally on the night of the New Hampshire primary in Columbia, South Carolina, the United States, on February 11, 2020. (REUTERS / Randall Hill)

However, after winning the election, Biden’s tone changed.

In December 2020, President-elect Biden cast doubts on general student loan forgiveness when he told a meeting of news columnists that the Democrats’ argument to remove student debt through executive action was “quite questionable,” adding, “There i’m not sure. I probably wouldn’t do that. “

In February 2021, when a member of the audience at a CNN City Hall asked President Biden if he would be waiving $ 50,000 on student loans, Biden replied, “I won’t be able to do this.”

“It depends on whether or not you go to a private university or a public university,” Biden explained. “It depends on the idea that I tell a community, ‘I’m going to cancel the debt, the billions in debt for people who went to Harvard and Yale and Penn.’”

In May 2021, in an interview with the New York Times, Biden reiterated his reluctance to cancel debt: “The idea that you should go to Penn and pay a total of $ 70,000 a year and the public should pay for it? I do not agree.”

U.S. President Joe Biden speaks about voting rights at the National Constitution Center in Philadelphia, Pennsylvania, July 13, 2021. (Photo by SAUL LOEB / AFP)

“They believe they were promised”

The basic argument in favor of the President’s ability to cancel student debt through executive action, as the Legal Services Center at Harvard Law School pointed out in a letter to Senator Warren, is that the Secretary of Education has the power to “cancel existing student loans.” Debt under a separate legal authority – the power to modify existing loans under 20 USC § 1082 (a) (4). “

In March 2020, White House Chief of Staff Ron Klain told Politico that President Biden had asked Education Secretary Miguel Cardona to create a memo on whether the president has legal authority to ordinance $ 50,000 in student loan debt .

“Biden is overdue – student debt relief is overdue,” Thomas Gokey, organizer of the Debt Collective, an activist group, told Yahoo Finance. “The time for that was the first day of administration.”

The Department of Education has not responded to requests for comment on the memo, despite ED recently hiring Toby Merrill, who founded the Project on Predatory Student Lending at Harvard Law School and co-authored Warren’s legal analysis.

In any case, ED officials are now reportedly recommending that the White House extend the pandemic payment hiatus until at least January 2022.

Much is at stake: Experts, advocates, and prominent Democrats stressed that some degree of student loan forgiveness would be a crucial step before the pandemic’s payment hiatus ends.

“It would be wise to make this decision before payments resume,” said Yu, who works with many low-income borrowers. “There is no point in getting people to pay and then cancel their loans … [and] If we can clean some of the debt off the books, it could make it a lot easier to turn the system back on. “

Yu added that a large federal lending company pulling out of the loan program at the end of the year is a “recipe for disaster” as the government moves about 8.5 million borrowers to another service provider.

“Why send bills and notes to millions of people and then just turn around and say, ‘Just kidding, that’s not it’?” Seth Frotman, executive director of the Student Borrower Protection Center and former student loan ombudsman for the Consumer Financial Protection Bureau, told Yahoo Finance. “It [would] Cause confusion and disappointment among borrowers. “

Warren previously told Yahoo Finance that if the payment hiatus is lifted without a cancellation, “we will face a student loan time bomb that, if it explodes, could throw millions of families over a financial cliff.”

Warren and other Democrats also asked ED about student debt collection practices amid a possible wave of student loan defaults as the pandemic’s payment hiatus expires.

“People are very scared,” said Yu. “They believe they have been promised some debt relief. And for many of the people we work with, not having that burden would make a big difference in their lives.”

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Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.

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