Biden can do better on student debt

With student debt repayment beginning this month, a less ambitious Biden administration plan taking effect in the wake of a SCOTUS loss will offer relief to some. But is this the best we can do?

Oct 27, 2023

This month, federal student loan payments came due again after a 42-month hiatus that started during the COVID-19 pandemic. For borrowers, the added expense of loan repayments may hit hard, given the inflationary pressures that have already taken hold in the wider economy in the years since the loan freeze took effect.

The Biden administration has provided an on-ramp to return to repayment for borrowers, not counting any missed payments for the first year of renewed repayment as “delinquent”, nor reporting missed payments to credit bureaus.

For those in financial distress, the administration announced its new SAVE plan, which pegs the size of the monthly payment to income and family size. Even borrowers who went into default before the payment freeze have an opportunity to have their loans be put back into regular repayment status through the “Fresh Start” program.

Earlier this year, in a 6-3 ruling in the case Biden v. Nebraska, the Supreme Court ruled against the Biden administration’s initial student loan forgiveness plan. The Court ruled that the administration could not use the HEROES Act to eliminate $430 billion in student debt.

It’s worth noting that some commentators have questioned whether the Biden administration was fully committed to its original, more ambitious debt forgiveness plan. The legislative hook of the HEROES Act was always tenuous, but the Democrats successfully kept the issue alive through the midterms and got many young voters to come out to the polls to support them in no small part because of their moves on student debt.

Biden’s own history on this issue is rather striking. In 2005, Republicans passed a student debt bill that largely stripped bankruptcy protection from private student debt. At the time, the bill faced stiff opposition from Democrats in the Senate, but passed when 18 Democrats crossed party lines to support the bill.

One of the bill’s strongest proponents was none other than then-Senator Joe Biden, who had taken hundreds of thousands of dollars in campaign contributions from credit companies.

About one-third of Americans under 30 have student loan debt. More than one million Americans go into default every year. And three million Americans over the age of 60 are still paying off student debt they incurred decades ago, amounting to $86 billion in debt.

The debt cancellation the Biden administration has now engaged in uses a provision of the 1965 Higher Education Act which allows the secretary of education to “compromise, waive, or release” federal student loans.

Law professor Luke Herrine has argued that the executive branch would have broad power to extend debt relief far beyond what the Biden administration has proposed. And the organization Debt Collective has even written a model executive order that would cancel all federal student loan debt without requiring borrowers sign up for the program, relying on the same 1965 law on which the administration has based its student debt plan.

Debt Collective has encouraged borrowers to demand the administration do just that by creating a form that individualizes the borrower's information, generating a personalized letter to be sent to the Department of Education.

In the meantime, in a move sure to call to mind out-of-touch bosses trying to placate their employees’ demands for economic justice with pizza parties, Domino’s will mark the resuming of student loan repayments by offering free pizza for borrowers.

Here’s hoping free pizza isn’t the best we get.

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The Round Up

Here are the stories that caught our eyes this week and what they mean for the weeks ahead.

Workers put pressure on CTA to improve working conditions

The COVID-19 pandemic brought new challenges for the Chicago Transit Authority, which is dealing with an historic employee shortage.

Last year, a WTTW report found that nearly 14 percent of workers were clocking in an average of 50 hours or more a week. Some employees were working more than 80 hours a week.

CTA workers formed the Chicago Transit Justice Coalition to empower fellow workers and hold union leadership accountable in 2019, the year before the pandemic hit.

With the onset of the pandemic, their organizing expanded to address more issues, including worker safety and hazard pay.

CPS needs mandated committee to improve Black student achievement, group says

West Side aldermen joined the coalition of local activists to demand that Chicago Public Schools take more aggressive action aimed at improving Black student achievement.

The group called on elected officials to pass a state law that would mandate CPS create a committee focusing on improving the continued lagging test scores among Black students.

They also reiterated their call for a proposed election map for the Chicago Board of Education, which the Illinois General Assembly is still mulling ahead of the Nov. 5, 2024 election.

Chicago police oversight panel to push new outside investigation into cops with extremist ties

A police oversight panel will vote this week to urge Chicago’s top watchdog to investigate extremism within the Chicago Police Department in the wake of a recent investigative series by WBEZ, the Sun-Times and the Organized Crime and Corruption Reporting Project.

The Community Commission for Public Safety and Accountability, a civilian-led panel with broad oversight powers, will vote whether to recommend the city’s Office of the Inspector General “investigate recent allegations of officer involvement with extremists or hate-based organizations,” according to the agenda for its monthly meeting.

This week’s announcement came on the heels of Chicago Police Supt. Larry Snelling’s assurances to City Council members regarding “stringent” efforts to root out extremists and “remove those members from our ranks.”