The Higher Education Act, which empowers the federal government to issue student debt, also allows the Department of Education to write off debt settlement through the “compromise and settle” provision. This means that by decree, without new legislation, the president can eliminate student debt.
It goes without saying that Joe Biden should issue such an order and write off all student debt. It would inject a huge slice of money into a besieged economy while removing the debt anvil around the necks of millions of working people. The benefits to ordinary people would be immense and the cost to government extremely low.
The student debt problem is getting worse every year. As I reported last year, student debt has tripled since 2006. It has at least something to do with the fact that tuition fees have increased by 30% since 2006, while rent has jumped by. 47% and that real wages only increased by 7% during this period. .
Student debt is also a major contributor to racial inequality of wealth. Not only does student debt hit blacks and Hispanics harder than whites, but black students are 130% more likely than their white counterparts to rack up six figures of student debt in the first place.
Meanwhile, the government collects only a small portion of the $ 1.5 trillion in total debt each year. With an annual income of over $ 3.3 trillion, the income the government receives from student debt is irrelevant.
In the midst of one of the worst economic depressions in U.S. history, it’s more crucial than ever to cancel student debt and put money straight into people’s pockets. So why isn’t the problem a slam dunk?
Instead, Biden touted a much smaller proposal. As NPR described it, Biden supports a provision that “asks the federal government to repay up to $ 10,000 in private, non-federal student loans for” economically distressed “borrowers.”
Who would be considered “in economic difficulty”, who would make that decision, and how long it would take to set up the program to do so are all, so far, a mystery. What we do know is that the proposal is not executive action, but a provision of the HEROES law – which the House of Representatives passed, but which faces grim prospects in the Senate.
In other words, Biden’s offer is to give less money to fewer people, after a longer waiting period, if and only if the Senate approves legislation that is very unlikely to happen. he approves. And by ensuring that only “non-federal” loans (i.e. issued by the private sector) are eligible, Biden’s plan further narrows down those eligible for relief while ensuring that banks get their share.
The result? Millions of people would remain heavily in debt, while private lenders would get a federal government bailout on loans that many borrowers could otherwise default on.
But we must not yet give up hope. While his record gives little reason to trust him, the fact that even moderate Democrats like Chuck Schumer are making relatively aggressive calls for student debt relief is significant. This suggests that, on this issue, the political elites are somewhat less united in their defense of the rich and powerful than on other issues. Combine that with the fact that the mechanism for change – executive decree – is much simpler than legislation, and you have a prime organizing target.
Biden’s record on student debt suggests he won’t do the right thing without a fight. But student debt is widely and deeply felt by millions of people; we are stuck in a depression where economic recovery is essential; and the ruling class is more divided on this issue than other major reforms, in part because the material stakes for the capitalist class are relatively lower.
All of these factors add up to a fight we can win. The only question is whether we can organize our camp on time.
