Calls are mounting for President-elect Joe Biden to erase student loan debt on his first day in the White House.
On Wednesday, 239 nonprofit and community organizations, including the NAACP and the American Federation for Teachers, urged the incoming president to act unilaterally and cancel nearly $1.7 trillion in student loan debt, arguing it could stimulate the pandemic-stricken economy and reduce the racial wealth gap.
"Before the COVID-19 public health crisis began, student debt was already a drag on the national economy, weighing heaviest on Black and Latinx communities, as well as women," the groups wrote in an open letter to Biden and Vice President-elect Kamala Harris. “That weight is likely to be exponentially magnified given the disproportionate toll that COVID-19 is taking on both the health and economic security of people of color and women."
The groups did not specify how much in loan debt they believed the Biden administration should forgive.
The initiative was spearheaded by Americans for Financial Reform, the Center for Responsible Lending, Demos, the National Consumer Law Center and Student Borrower Protection Center.
“We cannot wait a second longer for debt relief when we know the president has the authority to cancel student debt on day one," Natalia Abrams, executive director of the nonprofit advocacy group Student Debt Crisis, said in a statement. "With so much at stake, this is the most urgent opportunity to help the country heal from the health crisis, heal from economic harm, and heal from the history of racial disparities."
Biden has endorsed erasing some student loan debt "immediately" upon entering the White House, reiterating his support this week for a provision of the HEROES Act, which the Democrat-controlled House passed earlier this year.
Under that legislation, economically distressed borrowers would immediately have $10,000 in student debt forgiven. The government would also cover monthly loan payments for people with private student loans until September 2021 and forgive $10,000 of their debt.
“Immediate $10,000 forgiveness of student loans, helping people up there in real trouble," Biden said Monday. "They’re having to make choices between paying their student loan and paying the rent. Those kinds of decisions.”
A Biden official later told Fox News that the former vice president does not want to issue an executive order and instead wants Congress to legislate on the matter.
Some Senate Democrats and progressives are pushing for more debt relief: Sens. Chuck Schumer of New York and Elizabeth Warren of Massachusetts have both called on Biden to unilaterally cancel up to $50,000 of outstanding federal student loans per borrower.
"Biden-Harris can cancel billions of dollars in student loan debt, giving tens of millions of Americans an immediate financial boost and helping to close the racial wealth gap," Warren tweeted last week. "This is the single most effective executive action available for a massive economic stimulus."
Warren said Biden could use existing executive authority under the Higher Education Act to order the Department of Education to cancel student loan debt. Previous estimates show that proposal would provide total forgiveness to more than 75% of borrowers and partial forgiveness for more than 95%.
But new analysis from the Committee for a Responsible Federal Budget shows that canceling student loan debt is an ineffective stimulus measure: Eliminating $1.5 trillion in loans would translate to just $90 billion or less in cash available to spend in 2021, and $450 billion over the next five years.
"The majority of those most affected by the current economic crisis likely have little or no student debt," the analysis said, noting that more than 70% of unemployed workers do not have a bachelor's degree.
"It is unlikely that broad student debt cancellation would be well-targeted toward those experiencing income loss. Nor is it well targeted toward those with low incomes," the nonprofit agency said.