What Biden can’t do about student debt and what he won’t



Occupy Wall Street, the Lower Manhattan encampment that began and ended a decade ago, has not overthrown the two-party system, eradicated government corruption, or installed a socialist president. In retrospect, it was less of a political movement than a laboratory of radical ideas – many of which, due in large part to the post-Occupy organization, have since become much less radical. Take student debt. In the fall of 2011, the total amount of unpaid student debt in the country had just exceeded nine hundred billion dollars. A group called the Occupy Student Debt Campaign has taken the strict moral stance that all of this debt should be abolished. “The current scenario, in which government agencies, banks and other private lenders set sky-high rates and extract lavish profits, is corrupt and heinous,” the collective wrote on its website. “Immediate forgiveness in the spirit of a jubilee, where the injustice of unpayable debt is redeemed with one corrective act, is the only righteous response to this crisis.” At the time, a few Democrats supported relatively minor adjustments, such as debt refinancing, but no member of Congress, not even Bernie Sanders, supported the blanket cancellation of student loans. “We were constantly made fun of,” Thomas Gokey, a member of the group, told me. “Even nice people would say, ‘That’s a good idea. That will never happen. “

Occupy ended, but the idea of ​​debt cancellation continued to evolve. The amount of student debt in the country topped $ 1 trillion, then $ 1 trillion. The Occupy Student Debt campaign tried to persuade one million student debtors to default, openly and collectively, on their loans. This failed, but that campaign eventually turned into a campaign called Strike Debt, which later reappeared as Debt Collective. Activists continued to organize debtors, but they also began to try to convince politicians of the need for debt cancellation and to identify legal mechanisms that could achieve it. “Our position has always been that the government can and should cancel federal student debt,” Astra Taylor, one of the co-founders of Debt Collective, who also helped The New Yorker, said. “But it wasn’t until 2015 that we started doing government homework to explain how this could be accomplished.”

Most people assumed that any major change in student loan policy, such as blanket cancellation, would require new laws. President Barack Obama, citing a lack of “bold action” in Congress, has ordered his education department to make gradual reforms, consolidate some loans and cut some interest rates, far less than this. that activists wanted, but in accordance with what most experts thought to be. possible by executive action. Then, in 2016, Robyn Smith and Deanne Loonin, attorneys at the National Consumer Law Center, wrote a note highlighting an obscure provision in the higher education law. The provision, which has been on the books since 1965, gives the Secretary of Education the power to “enforce, pay, compromise, waive or release any right, title, claim, privilege or demand”. They proposed that the Department of Education, by far the largest collector of student loans in the country, already have the unilateral power to modify these loans as it sees fit. Smith and Loonin suggested the ministry should use this power to write off debt owed by a few thousand predatory for-profit college alumni. But Luke Herrine, then a law student at NYU and another co-founder of Debt Collective, saw no reason why the department could not use its discretion more drastically. “As far as I know, nothing in the current law prevents the department from using its power of compromise to write off large swathes, if not all, of its student loan portfolio,” Herrine said. wrote in 2017. In other words, he argued, the president could order the education secretary to write off any amount of student debt at any time, without waiting for further action from Congress. . It was more of a distant hypothesis than a looming possibility, especially since the then president was Donald Trump. “When I first pitched the idea, I didn’t expect it to go anywhere,” Herrine, who now has a PhD. student at Yale, told me recently. “At least not in the short term.

The idea began to gain acceptance in academic legal circles. “There was a lot of teasing at the start,” Herrine said. “Now there are still some experts who don’t agree with my interpretation, but it’s more like ‘This is not how it traditionally works’, not’ Here’s a clear and compelling reason for which this can not job.’ (Two Harvard law professors, for example, recently called Herrine’s interpretation “a plausible textual reading” but warned that a leaders’ debt relief initiative “could be stalled in court for many years.”) In 2019, Julie Margetta Morgan, who was then researcher at the Roosevelt Institute, a progressive thinking tank, asked Herrine to write a white paper called “An Administrative Path Towards the Cancellation of Student Debt”. Later that year, after Morgan joined Elizabeth Warren’s presidential campaign as political adviser, Warren announced a new plan: as president, using executive power, she would cancel over a trillion dollars of student debt. (Morgan now works at the Department of Education.) Warren argued that his plan, while it seemed expensive, would ultimately be a boon to the economy, boosting consumer spending and narrowing the racial wealth gap. Debt Collective ally Rep Ilhan Omar persuaded Bernie Sanders to join sweeping debt relief, and he quickly overwhelmed Warren: as she offered to write off up to fifty thousand dollars in debt per person , he pledged to cancel all of it.

Joe Biden, then the leading moderate candidate, began to question the debt cancellation and, as he often did during the campaign, he forged a compromise between left and center. In April 2020, Biden promised “Immediately cancel a minimum of $ 10,000 of student debt per person”. He did not say whether he would do so through executive action or by urging Congress to pass a bill, although the word “immediately” seems to imply the former. During his first month as president, at a CNN town hall in Milwaukee, Biden was asked how much debt he plans to write off. He spoke for several minutes, mentioning that one of his sons had graduated from Georgetown and Yale Law School “one hundred and forty-two thousand dollars in debt” but had paid it off, in part, by working for “a parking service. in Washington. (The same son, of course, also made astronomical sums of money working for a hedge fund, lobbying for various companies, and serving on the board of a Ukrainian natural gas company, but Biden omitted these. details.) Finally, he concludes, “I am ready to cancel the debt of ten thousand dollars, but not fifty.” Because I don’t think I have the power to do it by a pen sign. He appeared to suggest that the president has the power to write off debt up to, but not beyond, a certain unspecified amount of money – an interpretation that is, at best, legally ambiguous.

Members of the Debt Collective were both encouraged and discouraged. They had moved their proposal from the margins to the mainstream faster than they had thought possible. And yet, despite all their enthusiasm, they wondered if they were not running up against a brick wall: they could make legal arguments; they could have their allies hired by the Administration; they could even write a decree, but they could not get it signed by the president. Some activists thought the problem was ideological – that Biden, a son of the Delaware company, deeply believed in the free market, not a free ride. Or maybe he was waiting for his lawyers to tell him what he could do. April 1, in a maintenance Along with Politico, Ron Klain, Biden’s chief of staff, was asked if Biden plans to write off student debt through executive action. Klain said the education ministry was preparing “a note on the legal authority of the president.” Hopefully we’ll see that in the next few weeks. And then he’ll look at that legal authority, he’ll look at the policy issues around it, and he’ll make a decision. A few weeks passed. Then a few months. Biden’s press secretary Jen Psaki has been questioned on several occasions – in June, August, October – whether the legal review has been completed and what it has concluded. “I don’t have an update on this,” she said.

Debt Collective activists developed a theory: that Education Department attorneys had already written their memo, that they had informed Biden that he made have the power to write off the debt, and the Administration kept the memo silent because they didn’t like its conclusions. But it was just speculation. So Gokey, one of the organizers, submitted a request through the Freedom of Information Act. If a note had already been written, he would ask the Ministry of Education to send it to him. On August 20, he obtained the results: dozens of pages of e-mails between officials of the Ministry of Education, including a seven-page memo titled “The Secretary’s Legal Authority for Debt Cancellation in large scale “. The content of the memo was written – hot pink, for some reason – but it was proof that a memo existed. “I really felt that this version was excellent,” wrote the general counsel for the Ministry of Education on April 5. Three days later, the word “draft” was deleted from the header of the note. All this seemed to justify the theory of the militants.



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