Biden Could Eliminate Student Loan Debt on Day 1 by Executive Order
by John Lawrence, December 2, 2020
Total U.S. student loan debt is $1.67 trillion, and 2018 college grads with loans owe $29,200 on average. $1.54 trillion of this is held by the Federal government. The rest is held by private companies. During his campaign, Biden said he would forgive $10,000 of federal student loans as part of his Emergency Action Plan for the economic recovery. He could do even more. He could forgive all government held student loan debt outright. He probably won't do that, but what he might do is lower monthly payments in accordance with monthly incomes. He could also lower interest rates. He also has said that he would forgive more for people who had done or are doing community or national service. Elizabeth Warren in her Presidential campaign said that she would forgive all federal student loan debt on Day 1. Sen. Chuck Schumer, D-N.Y., and Warren in September called on the next president to forgive $50,000 in student loans for every borrower as soon as he entered the White House. In an interview earlier this month with The.Ink, Schumer said Biden could cancel the debt “with the pen as opposed to legislation.” More than 230 organizations and non-profits, including Americans for Financial Reform, the NAACP and the National Consumer Law Center, signed a letter on Nov. 18, calling on Biden to cancel student loans on his first day as president.
It would be appropriate if Joe Biden forgave all student loan debt on Day 1 since he voted in 2005 for the Bankruptcy Abuse Prevention and Consumer Protection Act, a law that made it vastly more difficult for struggling former students to rebuild their lives by discharging the debts and starting over. This was a gift to the credit card companies many of which had given Joe Biden campaign contributions. Many of them are registered or headquartered in Delaware. Biden was even known as the Senator from MBNA. So it's ironic that Biden will be the one to give relief in one form or other to student loan debtors.
What is so pernicious about student loans is that they can be given to anyone without any consideration given to the person's ability to repay, and since they can't be discharged in bankruptcy, the for profit schools piled on encouraging students in subjects which had no financial future to take on as much debt as they wanted. It seemed like a free lunch which is always what debt seems like until it comes time to repay Many students got deferments or forbearance putting off the day when they would have to start paying even further into the future. That made the deal that much sweeter, but to paraphrase James Baldwin, a debt deferred one day becomes a nightmare. When you make a deal with the devil what always happens is that eventually it comes time to pay.
The Guardian reported:
Despite his protestations, it is indisputable that Biden was an avid supporter of the 2005 bill as a whole and of its overall thrust of tightening up the bankruptcy code largely to the benefit of lenders at the expense of distressed families who would find it harder to file for bankruptcy.
“Biden was one of the most powerful people who could have said no, who could have changed this. Instead he used his leadership role to limit the ability of other Democrats who had concerns and who wanted the bill softened,” said Melissa Jacoby, a law professor at the University of North Carolina at Chapel Hill specializing in bankruptcy.
Other leading Democrats and consumer advocates did say no. In the Senate debate on the 2005 bill, Ted Kennedy was scathing about its implications.
“This legislation breaks the bond that unites America, it sacrifices Americans to the rampant greed of the credit card industry,” he said. Kennedy warned that even before the new provision kicked in young people were dropping out of college “because of the costs of student loans – they can’t pay them”.
So now Joe Biden gets a chance to redeem himself. He doesn't need campaign contributions from the credit card companies any more because he will never be in another campaign. He should rise to the occasion and forgive the student loan debt held by the government on Day 1, but he also needs to restore bankruptcy protection for privately held debt. This might require the cooperation of Congress, and, if Republicans maintain control of Congress, they will put roadblocks in the way of everything Joe Biden tries to do. Let's hope that the Democratic candidates in the runoffs in Georgia both win. Only then will Democrats control both Houses of Congress. If that comes to pass, the Senate will have to vote to eliminate the filibuster rule as well. Unless they do that, as long as there is one Republican in the Senate, that Republican will filibuster anything and everything Biden and the Democrats want to do. This is despite Joe's supposed ability to "work across the aisle."
