President Biden is expected to exclude student loan forgiveness from the upcoming annual White House budget proposal, despite pressure from progressive Democrats to cancel up to $50,000 in debt per borrower.
The Washington Post reported on Friday that White House officials have left key Biden campaign promises out of their coming budget proposal, including forgiving significant amounts of student debt, as the administration focuses on trying to pass what has already been introduced. Biden has proposed nearly $4 trillion in new spending to overhaul the nation's infrastructure and dramatically expand the government-fund social safety net, all paid for by a slew of new taxes on wealthy Americans and corporations.
"The President’s budget will focus on advancing the historic legislative agenda he’s already put forward for this year," Rob Friedlander, spokesman for the White House budget office, told the Post. "The budget won’t propose other new initiatives but will put together the full picture of how these proposals would advance economic growth and shared prosperity while also putting our country on a sound fiscal course."
Still, the decision to hold back one of Biden's top campaign plans from his first budget proposal has the potential to upset the Democratic Party's left-wing faction, which has repeatedly urged the president to wipe out student loan debt via executive action.
"We need to push him," Rep. Alexandria Ocasio-Cortez, D-N.Y., said Tuesday. "I believe in full student loan debt cancellation, but we have to push him to at the bare minimum a floor of $50,000 that Sen. Warren and Sen. Schumer have also advanced."
At the beginning of February, Sens. Chuck Schumer, D-N.Y., and Elizabeth Warren, D-Mass., introduced a resolution calling on Biden to unilaterally erase $50,000 in student loan debt. The lawmakers maintained that Biden could use existing executive authority under the Higher Education Act to order the Department of Education to "modify, compromise, waive or release" student loans.
"Canceling student loan debt is the single most effective executive action that President Biden can take to kickstart this economy," Warren said.
Biden has called for forgiving $10,000 in student loan debt as part of a broader coronavirus relief effort, and extended a freeze on student loan payments through Sept. 30, 2021, immediately upon entering office, benefiting about 41 million Americans.
Canceling student loan debt may disproportionately benefit wealthy Americans: A recent working paper published by the University of Chicago’s Becker Friedman Institute for Economics shows that erasing all student loan debt would distribute $192 billion to the top 20% of earners in the U.S., but just $29 billion to the bottom 20% of U.S. households.
Under a universal loan forgiveness program, the average individual among the top-earning borrowers would receive $5,944 in forgiveness, while those with the lowest incomes would receive $1,070 in forgiveness, according to the study, authored by economists Sylvain Catherine and Constantine Yannelis.
Such sweeping executive action by Biden would almost certainly face a legal challenge, and it's unclear whether it could survive. Critics have argued that using such power exceeds the president's authority granted by Congress.
Erasing student loan debt would also add to the nation's already ballooning national deficit, which totaled a record $3.1 trillion for the 2020 fiscal year.
Outstanding student loan debt has doubled over the past decade, nearing a staggering $1.7 trillion. About one in six American adults owes money on federal student loan debt, which is the largest amount of non-mortgage debt in the U.S. It has been cited as a major hindrance in people’s "economic life" by Federal Reserve Chairman Jerome Powell.