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Trump administration attempts to 'box in' Biden on student loan forgiveness

Aarthi Swaminathan
·Reporter
·4-min read

The Trump administration’s Education Department (ED) released a memo earlier this week arguing that student loan debt cancellation through executive action — a potential move advocated by prominent Democrats but downplayed by President-elect Biden — would be illegal.

The Education Secretary “does not have the statutory authority to cancel, compromise, discharge, or forgive, on a blanket or mass basis, principal balances of student loans, and/or to materially modify the repayment amounts or terms thereof,” the memo stated, at another point adding: “Among other things, we must be mindful of the fact that the Executive Branch does not have the dispensing power on its own.”

The content of the memo and timing suggested the outgoing administration was going to “try to box in the Biden administration,” Luke Herrine, a student loan expert and a PhD candidate at Yale, told Yahoo Finance. “The fact that this is a memo that's especially written to Betsy DeVos, who is no longer in office …. I think it's pretty clear that they were just trying to find a way to say with as much pomp and circumstance and authority as they can muster that they don't agree with this interpretation.”

U.S. President Donald Trump and Education Secretary Betsy DeVos make "U" symbols with their hands while posing with the Utah Skiing team as they greet members of Championship NCAA teams at the White House in Washington, U.S., November 17, 2017.   REUTERS/Joshua Roberts
U.S. President Donald Trump and Education Secretary Betsy DeVos make "U" symbols with their hands while posing with the Utah Skiing team as they greet members of Championship NCAA teams at the White House in Washington, U.S., November 17, 2017. (REUTERS/Joshua Roberts)

John Brooks, law professor at Georgetown University Law Center, noted that while the memo itself isn’t binding, the reading is clearly meant to influence the incoming Biden administration.

“It’s not unreasonable to think that this particular power in the Higher Education Act does not extend all the way to cancel everything for everybody,” Brooks said. “But what I think is unreasonable is… they don’t seem to acknowledge that there’s any ability for the Secretary to use his or her discretion absent some very clear language from Congress.”

The memo, written by a political appointee and sent internally to Education Secretary Betsy DeVos, who resigned last week, detailed an interpretation of the Higher Education Act that argued that only Congress has the power to “enact legislation authorizing the Department to provide blanket or mass cancellation, compromise, discharge, or forgiveness of student loan principal balances, and/or to materially modify repayment amounts or terms.”

(Graphic: David Foster)
(Graphic: David Foster)

‘You don't need Congress’

Prominent Democrats have repeatedly called on Biden to take executive action and unilaterally cancel up to $50,000 in student loan debt for the roughly 43 million Americans who collectively owe more than $1.6 trillion in student loans.

“President Biden can undo this debt — can forgive $50,000 of [student] debt — the first day he becomes president,” Senators Chuck Schumer (D-NY) said in December. “You don't need Congress. All you need is the flick of a pen.”

The basic legal argument, as detailed by the Legal Services Center of Harvard Law School to Massachusetts Senator Elizabeth Warren, is that the Education Secretary has the power “to cancel existing student loan debt under a distinct statutory authority — the authority to modify existing loans found in 20 U.S.C. § 1082(a)(4).”

(Graphic: David Foster/Yahoo Finance)
(Graphic: David Foster/Yahoo Finance)

Toby Merill, a lawyer at Harvard’s Legal Services Center, argued that the next Education Secretary “has the ability and the legal obligation to cancel the debts of defrauded for-profit students right now” and hoped that the Biden administration will work to enact it “quickly so that these students will finally have the justice they have been denied for so long."

In any case, the executive action would require the support of the executive: Amid the push for him to unilaterally forgive debt upon taking office, President-elect Biden told reporters: “I think that’s pretty questionable. I’m unsure of that. I’d be unlikely to do that.”

Aarthi is a reporter for Yahoo Finance. Follow her on Twitter @aarthiswami.

If you would like to share your story about how you’re struggling or paid off your students, email her at aarthi@yahoofinance.com

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