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Former Education Secretary under Obama calls on Biden to cancel student debt

2/24/2022 | Annie Nova

CNBC

John B. King, Jr., who served as education secretary under former President Barack Obama, has joined a number of other leading government officials calling on President Joe Biden to cancel student debt through executive action.

King, who’s running for governor of Maryland, wrote in an editorial in Business Insider on Wednesday that the country’s outstanding student loan balance is “indisputably a crisis.”

“All too often, the crushing weight of student debt prevents people from even considering buying a home, beginning a family, or starting a new business,” King wrote.

King is not the only former U.S. Education Department official in support of cancelling student debt. Wayne Johnson, a senior student loan official under former President Donald Trump, resigned in 2019, saying the lending system was “fundamentally broken” and advocating for broad cancellation.

Even before the coronavirus pandemic, the country’s outstanding student loan debt balance exceeded $1.7 trillion and posed a larger burden to households than credit card or auto debt. Roughly a quarter of borrowers, or 10 million people, were estimated to be in delinquency or default.

Biden is also under pressure from Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Elizabeth Warren, D-Mass., who are pushing him to cancel at least $50,0000 per borrower.

“You don’t need Congress,” Schumer has said. “All you need is the flick of a pen.”

Biden has asked the U.S. Department of Education to prepare a memo outlining his power to forgive student loans, but the agency has had that report for more than 10 months and its findings have still not been made public.

In January, 80 House and Senate members wrote a letter to Biden urging his administration to share that report and to immediately cancel $50,000 in student debt for all.

Critics of a student debt jubilee say it would be unfair to those who didn’t borrow for their education and who’ve paid off their loans, and that it wouldn’t significantly stimulate the economy because college graduates tend to be higher earners more likely to redirect their monthly bill to savings than additional spending.

There are reports of disagreement on the topic within Biden’s closest circle, and the president himself has questioned if providing loan cancellation to those who’ve benefited from a college education is the best way to buoy middle class families.

Still, a spokesperson for the White House said the president continues to look into what debt relief actions can be taken administratively.

 

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