Forgiving student loan debt is a no-brainer, and Biden could do it tomorrow if he wanted to

• 45 million Americans owe $1.7 trillion in student debt, and 93% of that debt is federally owned.
• Forgiving student debt would generate more than $1 trillion of economic activity and create millions of jobs.
• The Biden administration could forgive all federal student loan debt tomorrow without Congress.
• Carl Gibson is a freelance journalist and columnist from Kentucky.
• This is an opinion column. The thoughts expressed are those of the author.
• See more stories on Insider’s business page.

President Biden took office facing down both a once-in-a-century pandemic and the economic fallout it created. But with Democrats having unified control of both chambers of Congress for the first time in more than a decade, Biden has a once-in-a-generation opportunity to effectively tackle those twin crises and significantly improve the lives of tens of millions of Americans.

One of the biggest ways to combat the economic crisis and ease the hardship faced by more than 45 million student borrowers would be to forgive all federal student debt on the US Department of Education’s balance sheet.

In 2018, Bard College’s Levy Institute of Economics estimated that full debt forgiveness would boost GDP by anywhere from $86 billion to $108 billion per year. The economists who authored the study also projected the creation of 1.2 million to 1.5 million new jobs every year, in the first few years following the elimination of federal student debt. This would lower the unemployment rate by anywhere from 0.22 to 0.36 percentage points over a 10-year period.

No brainer

According to the most recent figures from EducationData.org (which compiles data from the National Center on Education Statistics and the World Bank), 92.6% of the approximately $1.7 trillion in existing student debt is federally owned, and the average borrower owes more than $36,000 in federal loan debt. Because the Higher Education Act of 1965 granted broad power to the US Secretary of Education to oversee the financing of higher education (including federal student loans), the executive branch has the unilateral authority to write down, release, or waive any right, claim, lien, title, or demand associated with federal loans.

Debt forgiveness wouldn’t require spending any tax dollars – just forgoing repayment. It would also mean students wouldn’t have to spend money paying down the tens of thousands of dollars in debt following them around for the bulk of their adult lives. It’d be like loaning a friend $100, then getting hired at your dream job, and telling your friend they can just keep the $100 instead of paying you back.

Aside from the financial and moral arguments, forgiving student debt is also a political slam-dunk, as it has bipartisan support from constituents. A September 2020 poll conducted by Student Defense, the Defend Students Action Fund, and Data for Progress found that more than two-thirds of Americans (and 58% of Republicans) support some form of student debt forgiveness. Democrats should aggressively pursue it if they want to hold onto and expand their Congressional majorities in the midterms.

However, President Biden has refused to even entertain any student debt forgiveness beyond $10,000 per borrower, and indicated he would only do so if Congress sent him a bill. According to higher education experts, Biden’s proposal would forgive all debt held by roughly a third of student borrowers, and reduce the total amount of outstanding student debt by approximately 20%. Even though Senate Majority Leader Chuck Schumer has been urging Biden to forgive $50,000 per borrower – which would cancel debt for approximately 80% of borrowers – Biden has held firm, even telling a woman during a televised town hall asking him about debt forgiveness that he would “not make that happen.“

During his February town hall, Biden argued that forgiving student debt would disproportionately benefit the rich and graduates of elite colleges like Harvard and Yale. But as NPR already pointed out, Ivy League students represent less than 0.5% of all undergrads, and many of those students come from wealthy families and don’t need to take out loans to finance their education.

Even though cancelling all student debt above Schumer’s $50,000 threshold would primarily impact those in high-income professions like attorneys and doctors, a longtime student debt activist countered that forgiving higher levels of debt are all the more necessary.

“Traditionally, for people to enter those fields, they’ve had to come from a more affluent background,” Janna Powell, a volunteer with the Debt Collective told Insider. “We need more people to have access to become doctors and to become other professionals… It’s become harder and harder over the years.”

Given his decades of experience in Washington in both the legislative and executive branch, Biden can’t exactly feign ignorance about the details of the Higher Education Act, or about the legality of the executive branch using its authority to pursue student debt forgiveness. Biden’s opposition to student debt forgiveness could instead be attributed to his desire not to upset the apple cart for the most prominent corporate citizens in Delaware, which he represented in the Senate for nearly 40 years.

Big money in little Delaware

According to federal campaign finance records, then-Sen. Biden received more than $500,000 in contributions from the lending industry – much of which is concentrated in Delaware – in the 2003-2008 campaign cycle alone. Pressure from Delaware’s main industry may have been what led Biden to support the controversial Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

That bill effectively made it impossible for student debtors to file for bankruptcy without proving “undue hardship.” A student borrower’s 2019 column in the Cleveland Plain Dealer pointed out that the “undue hardship” standard is “rarely upheld by courts in a majority of cases.” Additionally, the bankruptcy bill made it possible for student loans to be packaged and securitized into “Student Loan Asset-Backed Securities,” or SLABS, eerily similar to the subprime mortgages that led to the 2008 financial crash. Elizabeth Warren was so incensed by the 2005 bankruptcy bill that it inspired her to run for public office.

One towering landmark of the Wilmington, Delaware skyline is the Navient building, which coincidentally sits roughly a half-mile away from Wilmington’s Chase Center, where Joe Biden gave his victory speech as President-elect. Navient, which broke off from Delaware-based Sallie Mae in 2014, is one of the largest servicers of federal student loan debt, with a portfolio of approximately $300 billion in debt held by 12 million borrowers. As publicly traded corporations, both Navient and Sallie Mae are expected to deliver returns on shareholder investment (in 2019, Sallie Mae flew its employees to a Hawaii resort to celebrate billions in student loan sales). Navient, in particular, has been sued many times in recent years over its business practices.

In 2017, I had the financial fortune to pay off more than $70,000 in federal student debt serviced by Navient (the principal was approximately $30,000, the rest was inexplicable fees and interest Navient tacked on). I even made sure to put each specific loan number in the memo field of each individual cashier’s check I took out, and paid every loan to the exact cent as of the day I visited my bank.

Later, when logging in to check the balance, I saw Navient improperly allocated the payments so no loan was fully paid off, meaning they remained active and could continue accruing fees and interest. I probably have a valid case against the company, but attorneys typically require retainers and Navient took my savings. My story is just one of millions.

Even if it means I never get my $70,000 back, I would consider it a big win if future students never have to go through a similar ordeal just to get an education.

Ultimately, Joe Biden is no longer the senior senator from Delaware. He’s the President of the United States and he has 45 million constituents who need him to not only forgive student debt, but also hold accountable the companies who have wronged student borrowers right away.

Carl Gibson is a freelance journalist and columnist from Kentucky. His work has been published in CNN, The Guardian, The Washington Post, Barron’s, The Houston Chronicle, The Independent, and NPR, among others. He currently writes ad scripts for Really American PAC. Follow him on Twitter @crgibs.