Education Department said on Thursday that the Biden administration has forgiven $1.2 billion more in student loans for 35,000 borrowers through its Public Service Loan Forgiveness Program.
92% of student loan debt is publicly owned through the Department of Education. This department can - and periodically does - write off loans as bad debt for a variety of reasons. And the policies used to determine when the department writes of the loan are set by the department itself.
However, the funding for new loans is derived in large part from the repayment of old debt. So the DoEd could scratch it’s trillion dollar balance off, but would then have this massive liability to the US Treasury with no way to pay it back (not unlike a bunch of the failed private banks during the 2008 crash). And, of course, no new loans would be forthcoming, forcing borrowers into the private lending market (where rates get into the double digits).
There are legalistic end runs Congress or the Treasury could do to avert this. But Dems blocked debt relief in 2009 and then again in 2017. The GOP is openly hostile to any kind of student debt relief, so they’re no help. And the Treasury is just independent enough to tell DoEd to piss up a rope, while backchanneling aid to Silicon Valley Bank and other failed private lenders.
So, it’s complicated. But also, it’s only not possible because we choose to exclusively bail out the Tech/Auto/Finance/Real Estate sectors and leave Education high and dry.
He could forgive it all as an “Official Act”
Republicans would fight it and SCOTUS won’t let us have nice things.
Oh damn, well 'spose should never try to do anything unless the Republicans agree with it.
“6-3 decision; now students owe double the money directly to SCOTUS. we accept Paypal”
It would depend on lower courts to decide if it’s official or not
It would get appealed to SCOTUS regardless of any lower court decision
At least if he tried, he might win the election.
he litrally did try that which started this whole thing…
He didn’t have a supreme court decision saying the president can do whatever they want as long as it’s an official act then.
This is like the 5th attempt at this. Of all the things to accuse him of not trying to accomplish, student loan forgiveness is not one of them
No he couldn’t.
92% of student loan debt is publicly owned through the Department of Education. This department can - and periodically does - write off loans as bad debt for a variety of reasons. And the policies used to determine when the department writes of the loan are set by the department itself.
However, the funding for new loans is derived in large part from the repayment of old debt. So the DoEd could scratch it’s trillion dollar balance off, but would then have this massive liability to the US Treasury with no way to pay it back (not unlike a bunch of the failed private banks during the 2008 crash). And, of course, no new loans would be forthcoming, forcing borrowers into the private lending market (where rates get into the double digits).
There are legalistic end runs Congress or the Treasury could do to avert this. But Dems blocked debt relief in 2009 and then again in 2017. The GOP is openly hostile to any kind of student debt relief, so they’re no help. And the Treasury is just independent enough to tell DoEd to piss up a rope, while backchanneling aid to Silicon Valley Bank and other failed private lenders.
So, it’s complicated. But also, it’s only not possible because we choose to exclusively bail out the Tech/Auto/Finance/Real Estate sectors and leave Education high and dry.