Warren Would Bypass Congress To Cancel Student Loan Debt On Day One Of Presidency

CNBC has more details on Warren's promise:

Democratic presidential contender Sen. Elizabeth Warren said Tuesday that she would begin to forgive student loan debt on the first day of her administration, using legal tools that would allow her to bypass Congress.

The announcement, which comes just weeks before voting begins in the first primary and caucus states, adds urgency to legislation she introduced over the summer to cancel the bulk of the nation’s outstanding student loan debt.

That bill, introduced with Rep. James Clyburn, D-S.C., would forgive up to $50,000 in student debt for individuals with household incomes under $100,000. But Warren wrote in her plan on Tuesday that the U.S. Education Department already has authority to cancel student debt, “and we can’t afford to wait for Congress to act.”

“I will start to use existing laws on day one of my presidency to implement my student loan debt cancellation plan that offers relief to 42 million Americans — in addition to using all available tools to address racial disparities in higher education, crack down on for-profit institutions, and eliminate predatory lending,” she wrote in the plan.

Warren is fighting to make a splash in the Iowa and New Hampshire contests early next month. The Massachusetts progressive has slipped in state polls in recent weeks, and is now behind former Vice President Joe Biden and Sen. Bernie Sanders, I-Vt., in both states. She also trails Pete Buttigieg, former mayor of South Bend, Indiana, in Iowa.

Americans hold more than $1.5 trillion in student debt, and the problem is particularly acute in Iowa and New Hampshire. More than 60% of new graduates in Iowa and 76% of those in New Hampshire have outstanding student debt, according to The Institute for College Access & Success. And recent graduates in those states also carry higher balances than the national average of around $30,000.

Warren’s plan to eliminate student debt goes further than the proposals put forth by Biden or Buttigieg but stops short of Sanders’ call to erase student debt entirely.

Alongside the new plan, Warren released a letter written to her by three legal experts who vouched for the legality of a president canceling student debt through executive action. The experts, based at the Project on Predatory Student Lending at Harvard Law School, described such a move as “lawful and permissible.”

Bloomberg via MSN also said:

Senator Elizabeth Warren proposed Tuesday to ease federal student loan debt with executive authority, in a policy rollout aimed at attracting young voters.

Warren said that as president, she would not wait for Congress to approve her plans to cancel or modify federal student debt. Instead, she would directly authorize the Department of Education to provide as much as $50,000 in relief to about 95% of student loan borrowers.

She has said she would relieve $640 billion of student debt, a pledge that would be funded by her proposed tax on wealth for households with assets of more than $50 million. That, however, depends on the wealth tax passing Congress, which would take longer and might be difficult.

Warren trails Senator Bernie Sanders in support from younger voters, a crucial bloc for Democrats in the November election.

Under the Higher Education Act, Warren argued, the Department of Education has the discretion “to modify, compromise, waive or release student loans.” She says that would allow her administration to cancel federal student debt.

In her proposal, she vowed to simplify the cancellation application process, increase outreach to borrowers to encourage them to apply for relief and assist in improving borrowers’ credit history.

”It would take a tremendous amount of creative legal reading to allow for a blanket discharge of nearly all student loan debt within the existing regulatory framework,” said Dennis Cariello, co-chairman of the education practice at Hogan Marren Babbo & Rose Ltd. and a former senior attorney at the Education Department.

The rules governing the federal student loan program and the secretary of Education’s authority to cancel debt are “really designed for individual determinations, like a specific borrower’s inability to repay in a reasonable amount of time, not for widespread forgiveness,” he said.

Student loan experts and consumer advocacy groups, who pushed President Barack Obama on a similar idea, found his administration as too timid to tackle the burgeoning student debt crisis and its impact on the household balance sheets and U.S. economic growth.

Warren also promised to end federal aid to for-profit colleges, crack down on predatory lending and address racial disparities in the education system.