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- Senate Democrats Chuck Schumer, Elizabeth Warren and Bob Menendez say a piece of the $1.9 trillion coronavirus relief package will make it easier for President Joe Biden to cancel federal student debt.
- The legislation will make loan forgiveness tax-free, preventing borrowers from facing a surprise bill if their debt gets canceled.
- The senators want Biden to forgive up to $50,000 in debt through executive action, while the president has urged lawmakers to pass legislation lifting $10,000 in loans.
A provision tucked into the $1.9 trillion coronavirus relief package should make it easier for President Joe Biden to cancel a chunk of federal student loan debt, three Senate Democrats said Monday.
The pandemic aid plan signed into law Thursday makes loan forgiveness tax-free through 2025, eliminating an administration concern that a surprise tax bill would await anyone whose debt had been canceled.
The provision’s authors — Sens. Bob Menendez of New Jersey and Elizabeth Warren of Massachusetts, along with Senate Majority Leader Chuck Schumer of New York — contended the measure clears one hurdle in the way of Biden canceling debt through executive action.
“Student loan debt is crushing millions of Americans,” said Warren, who along with Schumer and other congressional Democrats has urged Biden to forgive up to $50,000 in federal student loan debt per borrower.
“President Biden has an opportunity to fix that with a stroke of a pen,” she told reporters. “This bill helps pave the way to cancel $50,000 in student loan debt.
The call Monday continued a push by the senators to get the president to ease the student debt burden through executive action. They say wiping out much of the $1.7 trillion owed by U.S. student loan borrowers would stimulate the economy and help Black and Latino Americans disproportionately hurt by the debt crisis.
Warren and Schumer contend Biden has the authority to forgive debt based on a precedent set by Presidents Barack Obama and Donald Trump. While Biden has said he wants Congress to forgive up to $10,000 in loans through legislation, lack of GOP support has made passing such a bill a challenge.
“I think it’ll be much harder to do legislatively. We have not seen our Republican colleagues jump at this opportunity,” Schumer told reporters.
Menendez added: “Why wait for legislation?”
The Biden administration has said it is reviewing the president’s authority to forgive debt. A White House spokeswoman did not immediately respond to a request for comment.
The provision in the coronavirus relief legislation prevents borrowers from facing a surprise income tax bill if their debt is forgiven. It applies to federal loans canceled through 2025.
Schumer said the provision would help nearly 100,000 people who are already in repayment plans that offer some form of loan forgiveness. The senators noted that critics cited the potential tax burden on borrowers as a reason not to forgive debt before the pandemic aid bill passed.
Biden has resisted efforts to cancel up to $50,000 in debt. He has contended wider forgiveness, as opposed to the $10,000 he supports, would benefit higher earners who accumulated debt on their way to earning one or more degrees.
Warren said capping the amount of debt forgiven would limit relief for borrowers of color who “don’t get the same kind of payoff” from taking out loans.
“A college diploma, which was surely the intent of most people when they took on student loan debt, has not always paid off for everyone equally,” she said.
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