Senate Majority Leader Chuck Schumer again urged President Joe Biden to reconsider canceling $50,000 in student loan debt for Americans, citing a provision in the recently passed $1.9 trillion American Rescue Plan.
In a speech on the Senate floor Monday, Schumer said the provision in the stimulus bill that makes loan forgiveness tax-free until 2026 “sets the stage” for Biden to issue widespread forgiveness of student loan debt, a policy decision the majority leader said would be “life-changing.”
“For much of American history, education has been a ladder up,” said Schumer. “For too many these days, student debt has become the anchor weighing them down—making it harder to start a family, buy a home, plan a career, and so much more.”
BIG—The #AmericanRescuePlan makes student loan forgiveness tax-free.
This means President Biden can #CancelStudentDebt without anyone getting stuck with a tax bill.@SenWarren and @SenatorMenendez wrote the amendment, and I made sure it was included in the #AmericanRescuePlan.
— Chuck Schumer (@SenSchumer) March 15, 2021
The provision, championed by Schumer’s fellow Democrats Massachusetts Sen. Elizabeth Warren, and New Jersey Sen. Bob Menendez, will shift the view of debt as taxable income and eliminate the possible penalty of heightened tax on partial or full loan forgiveness. (RELATED: Ocasio-Cortez: ‘It’s Go Time’ For Advocates Of Student Debt Cancellation)
Schumer said he believes Biden has the “legal authority” to forgive up to $50,000 in student loan debt, not just $10,000, the figure that his administration had promised in the past.
A previous concern of the Biden administration was that if they were to cancel student loan debt in such a large amount, a hefty tax bill would await students. The majority leader referred to this as “giving with one hand and taking away with the other,” and thanks to Warren and Menendez’s provision, he said nothing is stopping Biden from passing this kind of legislation.
Schumer also said he believes not only is this an economic issue but an issue of race as well.
“20 years after starting college, the median white borrower will owe 6% of their student debt, while the median Black borrower owes 95% of their debt,” he said. “Canceling up to $50,000 in student debt would close the racial wealth gap by 28 percentage points among those households.”
During a CNN town hall on Feb. 16, Biden doubled-down on his opposition to forgiving more than $10,000. He said he can’t get behind forgiving billions of dollars in debt for those who have gone to schools like “Harvard and Yale and Penn” and the money should be better spent on early education for those who come from disadvantaged circumstances. Biden confirmed any action regarding loan forgiveness should come from Congress, not an executive order.
It is unclear if this new provision and the pressure from the three Democratic senators will change Biden’s mind on blanket federal student loan forgiveness. However, White House press secretary Jen Psaki tweeted Biden would be open to “reviewing whether there are any steps he can take through executive action” regarding the issue.
