House Speaker Nancy Pelosi (D-CA) threw cold water on the idea being pushed by other prominent Democrats that President Biden could enact student loan forgiveness through 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 on Wednesday. "He can postpone, he can delay, but he does not have that power. That would have to be an act of Congress."
Other Democratic lawmakers, led by Senate Majority Leader Chuck Schumer (D-NY) and Senator Elizabeth Warren (D-MA), have repeatedly urged President Biden to enact student loan forgiveness of $50,000 per federal loan borrower.
“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.”
On Tuesday, Warren said that extending the student loan pandemic payment pause — currently set to expire at the end of September — and debt forgiveness "is a matter of economic justice. It is a matter of racial justice. The President of the United States can remove this sword. The president can prevent this pain. The president can cancel $50,000 in student loan debt."
One of Biden's campaign promises involved cancelling $10,000 in federally-backed student loan debt for all borrowers, but the president has been 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).”
In March 2020, White House Chief of Staff Ron Klain told Politico that President Biden had asked Education Secretary Miguel Cardona to compile a memo on whether the president has the legal authority to forgive $50,000 in student loan debt through executive order.
The Education Department (ED) has not responded to requests for comment on the memo, though ED recently hired Toby Merrill, who founded the Project on Predatory Student Lending at Harvard Law School and co-authored the legal analysis provided to Warren.
Asked about the discussion with the White House on Tuesday, Schumer said that they are "making good progress" regarding both the payment pause and forgiveness.
"I think we've made progress — in fact some of the arguments that they used to make, they no longer make," Schumer said. "One is it'll get taxed — we took care of that ... another is they don't have the legal authority — we don't hear much of that anymore, because we think they do. So we're making progress and we're going to keep at it."
Pelosi, speaking on Wednesday, went the opposite direction.
"Suppose ... your child just decided they, at this time, [do] not want to go to college, but you're paying taxes to forgive somebody else's obligations — you may not be happy about that," Pelosi said. "But you know what, we want all of our kids to reach their fulfillment to the extent that they want to go to college. We do not want them to be prohibited from doing that for financial reasons."
Aarthi is a reporter for Yahoo Finance. She can be reached at email@example.com. Follow her on Twitter @aarthiswami.