President Joe Biden broke with Democrats who are pushing for a sweeping executive order to forgive $50,000 in federal student loan debt, saying he will only support a plan to erase one-fifth of that amount for individual borrowers.
Biden was asked at a CNN town hall on Tuesday whether he would support a plan proposed by Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Elizabeth Warren, D-Mass., to forgive up to $50,000 in student debt after the president proposed a more limited $10,000 cancellation plan.
Biden said he "would not" eliminate $50,000 in student debt, arguing that need depends on whether someone went to public universities or private universities like "Harvard and Yale and Penn." That money could instead be used to boost funding for early childhood education, he said. Instead, Biden proposed, community college tuition should be free for everyone, and state university tuition should be free for families making under $125,000.
Those latter proposals are widely embraced by Democrats. But Rep. Alexandria Ocasio-Cortez, D-N.Y., a progressive leader in Congress, questioned the logic behind Biden's rejection of the Schumer-Warren plan.
"Why cares what school someone went to?" she asked on Twitter. "Entire generations of working class kids were encouraged to go into more debt under the guise of elitism. This is wrong."
Ocasio-Cortez also rejected Biden's argument that "we must trade-off early childhood education for student loan forgiveness."
"We can have both," she said. "The case against student loan forgiveness is looking shakier by the day. We've got the *Senate Majority Leader* on board to forgive $50k. Biden's holding back, but many of the arguments against it just don't hold water on close inspection. We can and should do it."
Biden later reiterated that he supports eliminating $10,000 in debt, but not $50,000.
"I'm prepared to write off $10,000 debt, but not 50 [thousand]," he said, "because I don't think I have the authority to do it" through signing an executive order.
A White House spokesperson later clarified to Slate that Biden supports legislation to eliminate $10,000 in debt and was not promising to use executive authority to do so.
Schumer and Warren have argued for months, however, that Biden does have the authority to unilaterally eliminate $50,000 in student debt via executive order.
"This is one of those things the president can do on his own," Schumer told reporters earlier this month. "President Biden has taken some good steps in the direction of student debt but we think he has to go much further."
Experts at Harvard's Legal Services Center and its Project on Predatory Student Lending also concluded last year that the president has the authority to order a sweeping cancellation of student debt.
Earlier this month, Schumer and Warren, along with dozens of other Democratic members of Congress, introduced a resolution calling for Biden to use his authority under the Higher Education Act, which gives the education secretary the authority to "compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption." The Trump administration used the law last year to suspend interest on federally-held student debt.
The resolution also called on Biden to use the Internal Revenue Code to prevent any tax liability for borrowers resulting from the cancellation.
"During a time of historic and overlapping crises, which are disproportionately impacting communities of color, we must do everything in our power to deliver real relief to the American people, lift up our struggling economy and close the racial wealth gap," Schumer said in a statement at the time. "Democrats are committed to big, bold action, and this resolution to cancel up to $50,000 in federal student loan debt is one of the strongest steps the president can take to achieve these goals."
Warren added that even before the pandemic the "student loan debt crisis was already crushing millions of Americans."
"By cancelling up to $50,000 in federal student loan debt for borrowers, President Biden can take the single most effective executive action available to provide a massive stimulus to our economy, help narrow the racial wealth gap, and lift this impossible burden off of tens of millions of families," she said.
The Democrats' plan would fully eliminate student debt for about 36 million borrowers, according to CNBC, and reduce the total national student debt from $1.7 trillion to $700 billion.
Rep. Ayanna Pressley, D-Mass., has argued that the plan is a matter of "racial and economic justice." An analysis by the Federal Reserve Bank of New York in 2019 found that Black students are more likely to take out loans for college and that Black borrowers tend to have higher student debt loads. A poll this week found that 67% of Black voters strongly support eliminating student debt.
Some economists have argued that canceling $50,000 in student debt would disproportionately benefit top earners who went to expensive elite schools. Others say, however, that the higher figure is more inclusive of students who have racked up larger debts — most outstanding student loans are between $20,000 and $25,000 — and would reduce the racial wealth gap and boost the economy.
Federal Reserve Chairman Jerome Powell, a Republican Trump appointee, agreed with Warren during a hearing last year that the student debt crisis could hinder the economy as it tries to recover from the pandemic.
"People … are weighed down by debt in a situation like this, where they may be unemployed, or unemployment is very high among, for example, low-wage workers," he said. "That can weigh on economic activity."
Powell later cited data showing that "people … take on student debt in an effort to make their lives better and brighter, and if it doesn't work out that way, they drag that debt down through their economic lives, and it can get in the way of their credit history, of course, and their ability to own a home, and their whole economic life for many years."
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