WASHINGTON — President Biden said on Thursday he is considering clearing some of his student loans and will make a final decision “in the coming weeks.”
“I am considering debt reduction,” Mr Biden said after a speech in the Roosevelt Room of the White House.
The comments were the clearest signal from Mr. Biden thus far that he could fulfill a promise to forgive at least some of the debt for student loan borrowers. During the 2020 campaign, he said he would “make sure everyone in this generation gets $10,000 off their student debt.”
The White House has been under intense pressure to provide relief through executive action, with Biden extending a loan payment interruption for the fourth time this month. But the president made it clear that his decision would disappoint at least some progressive Democrats and proponents who argue large-scale cancellation is needed to address economic and racial inequalities and want him to wipe out $50,000 or more per borrower.
“I am not considering a $50,000 debt reduction,” Mr Biden said. But he added that he took “a hard look” at debt forgiveness.
“I’ll have an answer to that in the coming weeks,” he said.
The timeline comes after Mr. Biden discussed the issue with members of the Congressional Hispanic Caucus in a closed-door meeting at the White House this week. California Democrat Tony Cárdenas said Mr. Biden indicated he was open to debt forgiveness when asked if he would keep his $10,000 pledge. In a statement, Mr Cárdenas said he was pleased to see Mr Biden confirm that position.
“The debt burden is holding far too many Americans back from financial stability, buying homes, starting families and building their futures,” said Mr. Cárdenas. “Providing debt relief to millions of Americans is the right thing to do.”
Before that meeting, the White House had said year-round that it preferred Congress to handle student loan relief through legislation. But Senate Democrats don’t have the votes to deliver on Biden’s campaign promise, leaving executive action the only way.
The president has expressed concern in the past that forgiving $50,000 would amount to a giveaway for wealthy college graduates, a position that has led to pushback from advocacy groups.
“President Biden, we agree that we should not waive $50,000 in student loans. We should all cancel it,” said Wisdom Cole, the national director of the youth and college division of the National Association for the Advancement of Colored People, a civil rights organization. “$50,000 was just the bottom line. To the black community, which has built up debt over generations of oppression, anything less is unacceptable.”
Republican lawmakers strongly oppose the idea. South Dakota Senator John Thune, the second Republican, introduced a bill Wednesday that would prevent Mr. Biden from canceling his student debt through executive action and end the payment pause that began in March 2020.
“Any future suspension of federal student loan repayments should be left to Congress, not the Biden administration,” said Mr. Thune.
Even extending the payment pause has sparked some criticism from economists who say it will contribute to the fastest-growing inflation in 40 years. Pausing payments gives consumers more cash to buy goods during a period of constrained supply chains, fueling the price hikes that have frustrated Americans.
Pressure from Mr Biden’s supporters to take action on student loans has only increased during the payment hiatus as the Department of Education faces logistical challenges to reboot its payment collection system and lengthy administrative errors in its refund and utilities.
Under Biden’s leadership, the department has been making adjustments piecemeal that wiped out $18.5 billion in debt for 750,000 borrowers. The latest attempt came on Thursday, when it announced it would cut loans from 28,000 borrowers attending Marinello Schools of Beauty, a cosmetics chain that collapsed in 2016.
“Marinello preyed on students who dreamed of careers in the beauty industry, misled them about the quality of their programs and buried them in unpayable debts that they could not repay,” said Miguel A. Cardona, the education secretary.
Student loans: important things to know
Marinello was involved in “common and widespread” misconduct, including failing to properly train his students and leaving them without instructors for periods that sometimes lasted months, the department said. Those who attended the schools as of 2009 will be forgiven their federal loans, totaling $238 million, through a program known as credit defense against repayment.
In a departure from usual practice, the department said it will automatically cancel the debts of all borrowers who visited Marinello during that period, even if they didn’t actually file a claim through the borrower defense system.
The Department of Education is struggling to dissolve the borrower defense program, which has become the subject of lawsuits after it essentially ceased to function for most of the Trump administration — then sparked a torrent of denial messages.
Tens of thousands of borrowers are still awaiting claims decisions, some of which were filed six years ago. About 200,000 applicants — including 130,000 rejected by Betsy DeVos, then the secretary of education, in the Trump administration’s senior year — are part of a class-action lawsuit set to go to trial this summer. The federal judge overseeing the case called Ms. DeVos’s denials “disturbingly Kafkaesque.”
Another group of applicants sued the Ministry of Education on Monday over their long-unsolved claims. That lawsuit, filed in federal court in Boston, seeks relief for borrowers who attended the Kaplan Career Institute, a defunct school whose parent company paid $1.3 million in 2015 to settle fraud charges filed by Maura Healey, Massachusetts Attorney General.
Ms. Healey asked the Department of Education in 2016 to forgive the debts of the school’s former students, but the claim has since gone undecided.
“Many borrowers have no idea what the borrower’s defense is or how to apply, so their best chance of getting rid of these predatory debts is through a group layoff,” said Kyra Taylor, an attorney at the United Nations. National Consumer Law Center, one of three groups representing borrowers in the case. “Enough is enough.”