As the White House sweats over the rising price of milk, bread and gas, tens of millions of Americans are bracing for an even larger hit to their budgets on the horizon: the return of student loan debt.
That is, unless the administration moves to cancel those debts first.
Payments on federal student loans have been paused and interest rates set to 0 percent since passage of the CARES Act in March 2020. After repeated extensions, they were set to resume in September 2021, but a final extension allowed the pause to continue through January 2022. That’s been a dramatic financial relief for the nearly 45 million people with student loans who hold more than $1.7 trillion in outstanding student debt nationwide.
But come February, payments are set to restart. And activists hope there’s enough time left to mount a pressure campaign on the administration to cancel student debt before payments resume.
Organizers argue that after more than a year without payments, people “have gotten so used to federal student loans being paused” and fear their loan payments will eat away at newly obtained benefits like the child tax credit, said Braxton Brewington, press secretary of The Debt Collective.
“I can’t imagine what January will look like 30 days out when people are, like, ‘OK, I’ve gotten 12 emails from the Department of Education… This can’t really be happening,’” he added.
The Student Debt Crisis Center’s executive director Cody Hounanian told The Daily Beast that a lack of student loan payments has allowed folks to “fully participate in the economy, which couldn’t be more important right now as we’re trying to recover the nation from the pandemic.”
“We’ve heard from borrowers who, for the first time ever, have been able to purchase a home. We’ve heard from borrowers who, for the first time ever, could purchase a car to get them to work… It’s been a benefit to their families. It’s been a benefit to their communities,” Hounanian remarked.
Both groups say they’ve been organizing to try and push lawmakers toward progress on student debt cancellation before payments turn back on. Some of Congress’s most outspoken Democrats are already on board, calling on Biden to take action through executive power ASAP.
“As we continue recovering from this pandemic, people need help. Passing the Build Back Better Act is a major step but there’s still more to do. It’s time to cancel at least $50,000 of student debt per borrower and get people the relief they need,” Congressional Progressive Caucus Chair Pramila Jayapal (D-WA) tweeted last week.
And while the $50,000 relief number has powerful backers like Jayapal, Senate Majority Leader Chuck Schumer (D-NY), and Sen. Elizabeth Warren (D-MA), the White House has held firm at the $10,000 per borrower amount Biden promised during the campaign. Moreover, the administration has maintained extending the pause of the debt through executive action was about as far as his powers on the issue could go.
“On day one, the first day of his administration, he directed the Department of Education to extend the existing pause on student loan payments and interest for millions of Americans with federal student loans,” White House press secretary Jen Psaki said in February. “That was a step he took through executive action, but he certainly supports efforts by members in Congress to take additional steps, and he would look forward to signing it.”
Biden said earlier this year that he doesn’t believe he can unilaterally cancel outstanding student loans and requested a memo from the Department of Education in spring on what legal authorities he has on the matter.
That April 5 memo was later obtained by The Debt Collective through a public records request but only the subject of the missive—“The Secretary’s Legal Authority for Broad-Based Debt Cancellation”—was visible. The rest of the memo has been heavily redacted, leaving almost no substance visible to the public.
Still, other members argue cutbacks to the Build Back Better Act serve as justification for pushing the administration to cancel outstanding student loans.
Rep. Alexandria Ocasio-Cortez (D-NY) wrote in an Instagram story on Oct. 28 that given the paring-back of the Build Back Better Act, there is “more opportunity than ever to bring the heat on Biden to cancel student loans.”
“He doesn’t need [Sen. Joe Manchin’s (D-WV)] permission for that and now that his agenda is thinly sliced he needs to step up his executive action game and show his commitment to deliver for people,” she added.
Biden’s social spending package, which passed the House on Nov. 19, failed to include a plan to address student loans—and removed a provision to make community college free.
The American Civil Liberty Union told The Daily Beast that while the Biden administration “hasn’t done enough to provide relief to the millions of Americans who are burdened by the student debt crisis,” canceling $50,000 could be a means to narrow the racial wealth gap, with student loans disproportionately affecting Black and Latino communities.
The ACLU is running a petition drive for canceling $50,000 in student debt per borrower, which currently boasts over 36,000 signatures.
Campaign arms for Schumer, Reps. Ayanna Pressley (D-MA) and Jayapal, in addition to groups like the ACLU, within the last few months have launched paid ad campaigns on social media related to student debt cancelation aimed at increasing public pressure for action on the issue.
“If President Biden and his Administration can pause student loans, they can cancel them — and there’s never been a more important time for bold action,” a November ad from Pressley’s team reads.
House Speaker Nancy Pelosi has also insisted that canceling student debt would need to be done through legislation, which would likely amount to gridlock among Congress’ narrowly divided parties.
“People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power,” Pelosi said over the summer.
Still, the administration cites some progress on student debt this year through the Public Service Loan Forgiveness Program, which was established by Congress in 2007 to entice graduates into public service roles like teaching or law enforcement in exchange for having their school debts repaid after 10 years of work.
But the program had been plagued by unscrupulous rules and usually high rejection rates for applicants. In October, the administration released a series of patchwork fixes that advocates applauded.
The Biden administration also issued multiple rounds of forgiveness for students defrauded by for-profit schools like ITT Tech and Corinthian Colleges, in addition to announcing that 323,000 individuals on file for a disability with the Social Security Administration will have their student debt canceled, too.
American Federation of Teachers president Randi Weingarten told The Daily Beast that she’s seen firsthand how individuals react when their owed student debt drops to zero through federal programs.
“The joy and the relief is palpable,” she said.
But Weingarten, another advocate for canceling up to $50,000 in student debt, noted that with public service loan forgiveness, Biden was inheriting a broken program. Broad student debt cancellation would be a new system altogether. “As much as I think it's important to do, you know, it's a big policy decision,” she said.
Weingarten suggested that creating a program for forgiving all Americans’ student debt would be a timely undertaking—and would not likely amount to immediate gratification for borrowers.
“I think that there would have to be some expectations set... They’d have to take some time in making sure that this was done the right way,” she said. Weingarten suspects urgency is only going to build around the broader issue of student debt as the February cliff nears.
And among these activists calling for $50,000 in cancellation are still some calling for the administration to cancel it all.
Brewington says The Debt Collective is among them, telling The Daily Beast, “We will never come down from less than all of it…. Those numbers are arbitrary and don’t really mean anything.”