Biden Rules Out $50,000 In Student Loan Forgiveness: Here’s What He May Do Instead

Student loan forgiveness has been a major topic of debate this week, and momentum appears to be building towards presidential action to reduce or eliminate some amount of student debt.

The Biden administration—and the President himself—confirmed that some form of student loan cancellation initiative is under serious consideration, and a decision could be merely weeks away.

Here's what you should know.

Biden has ruled out $50,000 or more in student loan forgiveness

Following widespread speculation that Biden was considering wiping out a sizable chunk of student loan debt for a broad cohort of borrowers, the President definitively shut the door on those rumors on Thursday.

“I am not considering $50,000 in debt reduction,” he said at a press conference.

His comments contradicted statements by other leading advocates who suggested that Biden was considering potentially high levels of student debt cancellation. As recently as this week, Senate Majority Leader Chuck Schumer (D-NY) made optimistic comments that $50,000 in student loan forgiveness was becoming “more and more likely.”

Nevertheless, Biden confirmed that he is actively considering canceling an unspecified smaller amount of student loan debt using executive authority.

“I am considering dealing with some debt reduction,” he said—and we may have more specifics very soon. “I’ll have an answer on that in the next couple of weeks,” he told reporters.

Biden may enact student loan forgiveness for less than $50,000

Biden’s comments shooting down the idea of $50,000 or more in student loan forgiveness may not come as a surprise. At a CNN Town Hall last year, Biden was asked whether he would support $50,000 in student loan forgiveness per borrower. “I will not make that happen,” he said.

Nevertheless, Biden campaigned on supporting $10,000 in student loan forgiveness for borrowers, and he later expressed continued support for that figure as President.

Broad student loan forgiveness for an amount under $50,000 could still hugely impact many borrowers. According to the Center of American Progress:

• Canceling $10,000 in student loan debt for every borrower would result in 8.7 million student loan borrowers becoming debt-free.
• Wiping out $20,000 in student loans for borrowers would eliminate all student loans for one out of every three borrowers.
• Widespread student loan forgiveness of $40,000 would entirely wipe out the student loan debt for 35 million Americans, representing the vast majority of all student loan borrowers.

Biden may attach strings to student loan forgiveness

However, even if Biden settles on a specific student loan forgiveness figure, it does not necessarily mean that every borrower will receive that level of loan forgiveness.

Biden has previously expressed concerns that higher levels of student loan cancellation would disproportionately benefit graduate school borrowers (like doctors and lawyers) or borrowers who attended expensive, Ivy League institutions like Harvard and Yale—even though data suggests those concerns are not grounded in facts (only a minuscule percentage of student loan borrowers attended elite Ivy League schools).

But the administration is reportedly considering means-testing any student loan forgiveness initiative based on a borrower's income—similar to how Covid-related stimulus checks were limited during the pandemic. However, White House officials have not confirmed that any decision about means-testing has been made, and no specific income cap has been publicly discussed.

There are other ways that the administration could try to restrict access to student loan forgiveness.

For example, Biden campaigned on a pledge to eliminate most undergraduate student loan debt for borrowers who attended public institutions. Limiting student loan forgiveness for borrowers who attended certain schools or a specific education level could be an option.

However, any attempt to limit access to a student loan forgiveness initiative could be fraught.

Not only would it limit the pool of borrowers eligible for the benefits, but it may also place additional burdens on Department of Education staff and loan servicers—many of whom are already overburdened trying to administer other recent changes to the federal student loan system, including the now-expired Limited PSLF Waiver, a backlog of Borrower Defense to Repayment applications, and now the recently announced IDR reform initiative.

Legal mechanism to enact student loan forgiveness

Questions remain about how Biden may enact broad student loan forgiveness if he decides to proceed.

Many student loan borrower advocacy groups, legal scholars, and Democratic members of Congress have argued that the Higher Education Act (HEA)—the main set of laws that underpins the federal student loan system—has language that expressly delegates to the President (via the Secretary of Education) broad authority to cancel student debt. But that authority has never before been tested on a widespread scale.

Other scholars—including former Department of Education officials—have argued that Congress never intended for a President to rely on such a provision to enact massive student loan forgiveness.

Others have pointed to the HEROES Act of 2003, which allows a President to broadly “modify” existing federal student loan programs during a national emergency, such as a pandemic or a war. Both President Trump and President Biden used the HEROES Act to provide student loan relief to millions of borrowers, including extending the pause on payments and interest first enacted through the CARES Act in 2020.

Still, Republican opposition to Biden’s student loan forgiveness initiative is already mounting, and there might be legal challenges if he proceeds with a broad debt cancellation program.

“Why should a trucker who didn't go to college have to pay off a lawyer's student loan debt? Because that is what Biden is proposing when he says he will “forgive” student loan debt,” said Sen. Tom Cotton (R-AK) in a tweet earlier this week, echoing a key Republican talking point.

Leading Republican senators also plan to file a bill to prevent Biden from canceling student loan debt. However, such a bill would largely be symbolic as it has little chance of passing Congress, where Democrats hold slim majorities in both the House and the Senate.