Because the government isn’t actually paying money to a third party lender to retire the debt. It’s just saying it doesn’t need to be paid back and it can only do that with debt it issued using taxpayer funds.
However, it might be able to be applied to FHA mortgages for example if that debt is held by the government? Not sure if they’re bundled and sold to third parties?
Who is going to challenge this executive order and how are they going to fund that challenge? And when? After the order is issued and in place, the loans are forgiven?
I don’t think EO are challenged very often. A new president comes in and issues a ton of EO in the first days of the presidency (often undoing EO from the previous president). Biden has already done some loan forgiveness by EO and no one has challenged them. The ‘pause’ was done by EO first by Trump and then continued a number of times by Biden.
If Biden issues the EO and someone does challenge it in court, the ‘pause’ would have to continue and that would probably cost more than the forgiveness itself as all loans would remain on pause, not just the $10k/student (plus the cost of defending the challenge).
There is specific language in the law governing the student loans that the Secretary of Education can” enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption…”.
IANAL, so I don’t know if that’s enough for the administration to issue that order.
There’s clearly some disagreement on legal authority because the WH has asked for memos regarding the same.
It would cost more to administer income limits than to just allow cancellations for everyone. But it wouldn’t look good for millionaires to get student loan relief.
$299k is worthy of student loan cancellation to help struggling families overcome student debt but families making $400k is “wealthy”.
My understanding is those pauses are based on the 2003 Heroes Act.
https://crsreports.congress.gov/product/pdf/LSB/LSB10568
For those interested, this is a fairly concise summary of the history and legal basis for the student loan pauses.
There is also a section on Legal Issues and Considerations for Congress which explores issues relating to the pauses which would also apply to the issue of loan forgiveness and the Education Secretary’s authority to do it.
According to Elizabeth Warren and Chuck Schumer, one of the goals of cancelling student debt is to “stimulate the economy”.
Stimulate the economy in an inflationary environment. Put more money in peoples’ pockets so we can increase consumption furthering inflation while the Fed is raising interest rates to do the exact opposite.
Does this even make sense??
A book published last year does a great job of explaining just how the current student loan and tuition crises came to be. It goes all the way back to the Sputnik launch. The number of policy mistakes and underhanded deals over the last 5 decades are legion. If there’s going to be debt forgiveness, the banks and the universities should be footing part of the bill, not the American tax payer.
The Debt Trap: How Student Loans Became a National Catastrophe by Josh Mitchell
(I have no connection to this person or book. I checked it out of my local library)
Referencing the earlier message from @MaineLonghorn :
Due to numerous flags overnight, I am closing the thread.