Schumer, White House at odds over how to cancel student loan debt

Senate Majority Leader Chuck Schumer and the White House are divided over how to move forward in the coming months on a key progressive priority: canceling large swaths of the outstanding $1.5 trillion of federal student loan debt.

The conflict forecasts a looming fight over student loan forgiveness that could be a major test of how far progressives can push President Joe Biden, who has sought to cast himself as a bipartisan dealmaker and unifier.

Biden advisers have repeatedly said they prefer to seek congressional approval to forgive at least $10,000 of debt per borrower, a campaign promise. But Schumer is ramping up efforts to convince the White House to move more quickly and cancel $50,000 of student loan debt per borrower “with the flick of a pen” through executive action.

That pressure from the top Senate leader from Biden’s own party appeared to draw a response from the White House on Thursday. A spokesperson said for the first time that administration officials were entertaining the possibility of executive action on the issue but also reiterated their goal of passing legislation.

“This is one of those things the president can do on his own,” Schumer said on Thursday at a press conference with Sen. Elizabeth Warren (D-Mass.) and progressive House Democrats who have been pushing for swift action from the Biden administration.

“President Biden has taken some good steps in the direction of student debt but we think he has to go much further,” Schumer said, adding that he and Warren met with Biden and his advisers several weeks ago to discuss the issue. “They have been extremely open to listening to us,” he said.

White House Press Secretary Jen Psaki said on Thursday that student debt relief is an “important priority for the president” and that he remained committed to canceling $10,000 of debt per person through legislation.

Psaki said that Biden “already took a step through an executive action on the first day, and he would look to Congress to take the next steps.”

Later, in a tweet, Psaki said White House officials are “reviewing whether there are any steps he can take through executive action” but she again noted that the president “would welcome the opportunity to sign a bill sent to him by Congress.”

Biden on his first day in office instructed the Education Department to extend for at least another eight months the freeze on monthly payments and interest on most federal student loans, which benefits roughly 40 million Americans.

But Biden has expressed doubt that he has the executive power to go further and cancel large amounts of student loan debt. “I think that’s pretty questionable,” he said in December. “I’m unsure of that. I’d be unlikely to do that.”

The White House did not include student loan forgiveness as part of its $1.9 trillion covid relief package. Biden advisers have signaled that they are looking toward the next major legislative recovery package to pursue that proposal.

Schumer said on Thursday that his goal was to build a groundswell of outside pressure on Biden to move ahead with executive action on student loans. “I told the president when we started on this that we were going to try to rally the American people behind this, to back him up when he decides, hopefully, to do it,” Schumer said. “And he had no problem with that.”

He waved off a question on Thursday about whether he was open to passing legislation to cancel student loan debt, as the White House has been promoting. “The easiest way to do it is for President Biden [to do it] with the flick of a pen,” he said.

Major labor unions and civil rights organizations, including the NAACP, are among the groups that have urged the Biden administration to use executive action to cancel student loan debt.

Rep. Ayanna Pressley (D-Mass.), who is leading the loan forgiveness push in the House, called it a “racial and economic justice” issue, noting that borrowers of color disproportionately take out student loans to pay for college and are more likely to struggle to repay them.

Pressley urged Biden to “be bold and responsive to the movement that elected him.”

GOP lawmakers, meanwhile, have been steadfast in their opposition to sweeping student loan forgiveness. Sen. Richard Burr (R-N.C.), the new top Republican on the Senate education committee, said on Wednesday that it would be “dangerous and foolhardy” for the Biden administration to pursue such a policy.

Trump administration officials at the Education Department last month issued a legal opinion that concludes the agency lacks the power to cancel large swaths of student loan debt without legislation. Biden administration officials could change that interpretation.

Some Congressional Democrats are also skeptical of the push to cancel large swaths of student loan debt. Rep. Bobby Scott (D-Va.), the chair of the House education committee, said that while he supports “significant relief” for existing borrowers, he wants to focus on ways to address the college affordability more comprehensively.

“The deferment on payments is a huge deal, and that gives us time, at least till September, to come up with other proposals,” Scott told POLITICO last week. “So the emergency part of the student loan problem has been taken care of by executive action.”

The cost of loan forgiveness has been a major sticking point when House Democrats have pursued it through legislation. Last May, Democrats released a Covid relief proposal that would have canceled $10,000 of debt for both federal and private loan borrowers. But House leaders later scaled back that proposal over concerns about the price tag, ending up with student debt relief that was targeted only to “economically distressed” borrowers.

Proponents of student loan debt cancellation say that one advantage to using executive action instead of legislation is avoiding congressional budgetary rules requiring offsets. “It doesn’t trigger the same PAYGO that you get when it runs through the legislative process,” Warren told reporters on Thursday.

Warren, who was the first presidential candidate in 2020 to propose using executive action under existing law to cancel student loan debt, said she expected the $50,000 per borrower benefit to cost about $650 billion. “This is about an executive action that ultimately will boost our economy,” she said.

Warren also said that she believed that the Biden administration could also prevent any loan forgiveness from triggering a tax bill for borrowers.

She noted that she convinced the IRS during the Obama administration to avoid taxing the loan forgiveness provided to students who attended certain for-profit colleges. “We will do that again” during the Biden administration, she said.

Juan Perez Jr. contributed to this report.