How Elizabeth Warren Plans to Cancel Student Loans With or Without Congress
Ask any professor of political science and he will tell you that the presidential candidates’ ambitions are beyond their means. The President can do so much to change policy only through our system of checks and balances. They need Congress to pass laws that will initiate dramatic changes in policy.
Senator Elizabeth Warren, however, has so many plans for her potential presidency that she is beginning to chart how she will work with the entire legislature to achieve her goals.
Warren says the Department of Education already has the power to begin reducing our collective student loan debt and reforming the higher education system. Yesterday she presented her plan at two key points on her website. Let’s take them one at a time.
First, about debt:
I will order the Secretary of Education to use his authority to initiate a compromise and change federal student loans in line with my debt cancellation plan of up to $ 50,000 for 95% of student loan borrowers (about 42 million people).
Sounds amazing. But how is this possible?
The Minister of Education may authorize student loan cancellation in excess of prescribed forgiveness and cancellation programs under the Higher Education Act (HEA). The law, which was originally enacted in 1965, is the largest piece of legislation governing federal government participation in higher education. There is an ambiguous line in the HEA which says that the student loan commissioner (the head of education prior to the creation of the secretary position ) “has the right to agree to changes to agreements or loans provided under this heading, and to compromise, refuse, or vacate any rights, titles, claims or claims arising from or acquired under this title. “
(Fun fact: HEA has been re-authorized – mostly updated – several times, most recently in 2008. It was supposed to be re-authorized in 2013, but it didn’t.)
Warren also plans to streamline the application processes for these existing programs and remove backlog of applications that have already been submitted. This, she claims, will result in debt cancellation of an additional 1.75 million people in addition to the 42 million she plans to help through her original $ 50,000 student loan debt cancellation plan.
One more thing: Warren wants to make it easier to cancel student loan debt in bankruptcy. Right now, if you file for bankruptcy , you will only be able to pay off your student loan debt if you pass the “over-hardship” test. “Until Congress takes action,” she writes, “I will order my administration to stop standing in the way of opposing bankruptcy petitions for borrowers and instead insist on a less strict interpretation of excessive difficulties.”
In addition, she reiterates that she will push Congress towards free tuition at public colleges, increase and expand Pell grants, and increase funding for historically black colleges and universities and institutions serving minorities.
Now for the second part of her plans to change the higher education system without congressional approval:
I also instruct the Minister of Education to use every authority at hand to rein in the commercial college industry, combat predatory student lending, and combat racial inequality in our higher education system.
Warren plans to order the Department of Education’s Office of Civil Rights to investigate how schools, state governments, and the student loan industry are affecting borrowers on the basis of race. She cites several reports that minority students borrow more to pay for college and take longer to pay off that debt. “We’ll look at the system from the top down, from decisions about public funding and institutional assistance to service practices, assessing fines and fees on outstanding loans, and access to repayment plans and cancellation options,” she writes.
It will also enforce and strengthen regulations restricting commercial colleges that exponentially recruit students from low-income families and minorities, she writes, and will re-staff the Department of Education’s office, which is investigating commercial school fraud. In addition, she will return the student loans department to the Consumer Financial Protection Bureau.
While Warren works on all of this, she will urge Congress to end federal funding for commercial colleges.
College costs were part of the Democratic presidential debate in Iowa last night, but Warren did not reveal her plans to forgive the student loan.