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Tuesday, October 20, 2020

Schumer, Warren Introduce Resolution To Cancel $50,000 In Student Loans To “Close Racial Wealth Gaps”

Senators Elizabeth Warren (D-MA) and Chuck Schumer (D-NY) rolled out a proposal on Thursday which calls for the next president of the Untied States to cancel up to $50,000 in student debt in 2021.

The plan would call on the next president to “take executive action to administratively cancel up to $50,000 in Federal student loan debt for Federal student loan borrowers using existing legal authorities…”

The plan would also call on the next president to ensure “no tax liability for Federal student loan borrowers resulting from administrative debt cancellation.” Moreover, it asks the next president to pause student loan payments and interest accumulation “for the entire duration of the COVID-19 pandemic.”

Doing so, according to the plan, would “ensure that administrative debt cancellation helps close racial wealth gaps.

According to The Hill, the Democrats are essentially handing Joe Biden a talking point – as President Trump and Senate Majority Leader Mitch McConnell (R-KY) have flatly opposed earlier attempts to forgive student debt. 

“We know that President Trump and [Education] Secretary [Betsy] DeVos have been totally against things like this. We understand that. But the next president could easily do this,” said Schumer, adding “We want to start getting people focused on this issue as a major issue that could be dealt with early next year.”

The $3.4 trillion HEROES Act passed in May included a provision to cancel up to $10,000 of student debt for a limited number of people. 

The measure introduced by Warren and Schumer Thursday calls on the president to take executive action to cancel up to $50,000 in federal student debt for every borrower in the United States, which would wipe out the student debt obligations for more than three-quarters of Americans who owe them.

An estimated 44 million Americans owe about $1.6 trillion in student loans. 

Schumer said the plan would protect student loan borrowers from having to pay taxes on forgiven loans.

“The president can use the IRS code to ensure federal student loan borrowers won’t have tax liabilities resulting from administrative debt cancellation,” he said. –The Hill

Warren raised the issue last Thursday during a Senate Health, Education, Labor and Pensions Committee hearing, noting that the committee had yet to hold any discussions on “the student debt crisis.”

“I think we ought to focus on how to deal with the $1.6 trillion dollars in debt that is crushing millions of people,” she said.

As Jonathan Turley also warns, the proposals may be a foreshadowing of a greater push to use unilateral executive powers under Joe Biden if he wins the election.

The senators insisted that the Secretary of Education has “broad administrative authority” granted by Congress to cancel federal student loan debt under section 432(a) of the Higher Education Act of 1965. Thus, they are arguing for the president to simply wipe out the debt by taking “executive action to broadly cancel up to $50,000 in federal student loan debt.”

I have long been critical of such unilateral executive actions to order massive increases in debt or the negation of federal laws. We need a serious debate over the leveraging of the future on the mounting debt for this rising generation. I am worried about this college debt but I am also worried about these students facing decades of debt that must be paid off by the government. We need a comprehensive debt plan.

Politicians are casually referring to trillion dollar increases in a variety of different packages. Many long-standing goals are being refashioned as “stimulus measures” but they would pile more debt on an economic recovery that could already be difficult after the pandemic.



Zerohedge

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