“Several members on the other side of the aisle have urged the Biden administration to cancel $10,000 to $50,000 in student loan debt — this is a questionable idea.” Chuck Grassley (R-IA) said during a Senate Judiciary Committee hearing on student loan debt and bankruptcy on Tuesday.
Grassley, ranking member of the committee and a 40-year veteran of the Senate, added that the Biden administration “also lacks the authority to do this, even Speaker of the House [Nancy] Pelosi herself recently said, and I want to quote: ‘The President can’t do it.’ So that’s not even a discussion.”
Pelosi’s comments, made during a weekly press conference last week, stands at odds with what other prominent Democrats have been pushing President Joe Biden to do via an executive order.
“People think that the President of the United States has the power for debt forgiveness — he does not,” Pelosi said during her weekly press conference. “He can postpone, he can delay, but he does not have that power. That would have to be an act of Congress.”
Senate Majority Leader Chuck Schumer (D-NY) and Senator Elizabeth Warren (D-MA), have repeatedly urged Biden to use executive authority to enact student loan forgiveness for the roughly 45 million borrowers with federally-backed debt.
“President Biden can undo this [student] debt — can forgive $50,000 of debt — the first day he becomes president,” Schumer (D-NY) said in December 2020. “You don’t need Congress. All you need is the flick of a pen.”
‘Moral hazard’ of student loan forgiveness: Grassley
One of Biden’s campaign promises involved cancelling $10,000 in federally-backed student loan debt for all borrowers.
However, the president is skeptical about enacting broad-based cancellation of up to $50,000 in student loan debt via executive action (as opposed to legislation passed by Congress).
The basic argument for the president to being able to forgive student debt through executive action, as detailed by the Legal Services Center of Harvard Law School in a letter to Sen. 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).”
At Tuesday’s hearing, Grassley explained his general opposition to any cancellation of student debt.
“We must consider the moral hazard and the cost to taxpayers,” Grassley said, later adding: “I don’t think that we should ask those who did not attend college to pick up the tab for those who did. So I urge my colleagues to look at all the factors that are driving high levels of debt in higher education and closely examine the costs associated with any reform.”
Aarthi is a reporter for Yahoo Finance. She can be reached at email@example.com. Follow her on Twitter @aarthiswami.