American college graduates have accumulated $1.5 trillion in student loan debt — a sum that has grown exponentially in recent decades and harmed debtors in myriad ways.
Student loan borrowers need relief. Crushing student loan debts can follow graduates for years and prevent them from fully participating in the economy. Often, they have to delay major life decisions, such as buying a home or starting a family, while paying their debts.
President-elect Joe Biden has committed to broad student loan forgiveness. Still, there's no guarantee that any of his proposals will become law, particularly if Congress remains divided.
How Loan Forgiveness Would Work
At least one in four student loan borrowers are delinquent, in default, or can't afford to pay their loans. According to Student Debt Crisis, a nonprofit organization, graduates' wages have decreased by 2.5% since 2000, pushing many borrowers onto a financial tightrope. The coronavirus and economic recession have only made these hardships worse.
Source: Pew Charitable Trusts, Student Debt Crisis
Biden has floated many ideas for reducing student loan debt. One proposal is to cancel at least $10,000 in federal student loans per borrower as a form of COVID-19 relief. This plan also calls for monthly loan payments to remain suspended during the pandemic.
He also supports forgiving all federal student loan debt for borrowers who meet all three of the following conditions:
- If you attended a public college or university; historically black college and university (HBCU); or private, minority-serving institution.
- If your loans went toward undergraduate tuition at one of the schools mentioned above.
- If your annual income is under $125,000.
To help cover forgiveness costs, Biden would like to raise taxes on corporations and the wealthiest households (those who earn $400,000 or more per year). According to higher education expert Mark Kantrowitz, these measures would slash outstanding student loan debt by about a third.
Obstacles to Loan Forgiveness
But it's unclear if loan forgiveness legislation will pass through Congress, particularly if the Senate remains in Republican control. Conservative politicians have opposed proposals for higher taxes on the wealthy, and Republicans currently outnumber Democrats in the Senate — though an outright majority depends on two runoff elections in Georgia, scheduled for January.
2020 U.S. Senate Election Results
51 needed for majority
The easiest path to debt relief is if the Democratic Party wins both runoff Senate races in Georgia. That would give the Democrats a majority in both houses of Congress and allow the party to use a budget reconciliation bill to pair student loan forgiveness with a tax adjustment.
If Democrats don't gain a majority in the Senate, Biden can also use executive authority to push student loan forgiveness. In September, Elizabeth Warren (D-MA) and Senate Minority Leader Chuck Schumer (D-NY) called on the next president to use executive power to enact broad student loan forgiveness.
"Congress, through the Higher Education Act, has already given the President and his Secretary of Education the ability to modify, compromise, waive, or release student loans," the senators wrote in a joint statement. "This authority provides a safety valve for federal student loan programs, letting the Secretary use her discretion to wipe away loans."
However, the Higher Education Act only offers limited executive authority. For example, federal statute restrictions would only make federal loans eligible for relief — not private loans.
At the very least, Biden can extend the moratorium on federal student loan payments, interest, and collections, which is currently set to expire after Dec. 31. President Trump could also extend the relief of the Coronavirus Aid, Relief, and Economic Security (CARES) Act before he leaves office.
Evan Thompson is a Washington-based writer for TBS covering higher education. He has bylines in the Seattle Times, Tacoma News Tribune, Everett Herald, and others from his past life as a newspaper reporter.
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