Representative Alexandria Ocasio-Cortez, DN.Y., said progressives must pressure President-elect Joe Biden to bypass Congress and write off billions of dollars in student loan debt when he takes over the House White early next year.
When asked on Instagram if the student loan cancellation was a “pipe dream,” Ocasio-Cortez argued the policy was not – but said progressives needed to push Biden to take it further on the question.
“It’s not at all a pipe dream,” said the New York Democrat. “And the most important thing is that it can be done by executive order, which means Biden wouldn’t need Mitch McConnell or the Republican Senate to forgive people’s student loans. The key is that we have to push him. . “
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Student loan stocks have doubled over the past decade, reaching nearly $ 1.7 trillion. About one in six American adults owe money on federal student loan debt, which is the largest non-mortgage debt in the United States.
Some Senate Democrats and Progressives are pushing for more debt relief: Senators Chuck Schumer of New York and Elizabeth Warren of Massachusetts have both called on Biden to unilaterally cancel up to $ 50,000 in outstanding federal student loans by borrower.
“Biden-Harris can write off billions of dollars in student loan debt, giving tens of millions of Americans an immediate financial boost and helping close the racial wealth gap,” Warren tweeted last week. “It is the most effective executive action available for massive economic stimulus.”
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Warren said Biden could use existing executive power under the Higher Education Act to order the Department of Education to write off student loan debt. Previous estimates show that the proposal would offer a full discount to over 75% of borrowers and a partial discount to over 95%.
Such drastic executive action would almost certainly face a legal challenge, and it is not known if it could survive. Critics have argued that the use of such power goes beyond the President’s authority granted by Congress. Canceling student loan debt would also add to the country’s already booming national deficit, which totaled a record $ 3.1 trillion in fiscal 2020.
Biden approved the writing off of some student loan debt “immediately” upon entering the White House, reiterating his support last week for a provision of the HEROES Act, which the Democratic-controlled House passed earlier this year.
Under this law, financially troubled borrowers would immediately benefit from a student debt relief of $ 10,000. The government would also cover monthly loan payments for people with private student loans until September 2021 and write off $ 10,000 of their debt.
“An immediate $ 10,000 student loan forgiveness, helping struggling people out there,” Biden said last week. “They have to make choices between paying their student loan and paying the rent. Those kinds of decisions.
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A Biden official later told Fox News that the former vice president was unwilling to issue an executive order and instead wanted Congress to legislate on the matter.
But new analysis from the Committee for a Responsible Federal Budget shows that canceling student loan debt is an ineffective stimulus: eliminating $ 1.5 trillion in loans would mean just $ 90 billion or less. in cash available to spend in 2021, and $ 450 billion over the next five years.
“The majority of those most affected by the current economic crisis probably have little or no student debt,” the analysis says, noting that more than 70% of the unemployed do not have a bachelor’s degree.
“A blanket student debt cancellation is unlikely to be well targeted to those experiencing income loss. Nor is it well targeted to those with low incomes,” the agency said. non-profit.