George Leef of the Martin Center explores President-elect Joe Biden’s possible cancellation of student loan debt.
Many people and groups are pressuring Joe Biden to issue an executive order that would cancel some or all federal student debts shortly after he takes office. During the campaign, Biden said that he would immediately cancel $10,000 of student debt for each borrower, but some want the incoming president to go further. For example, Senator Charles Schumer, the Democratic leader in the Senate, has advocated that Biden cancel student debts up to $50,000.
Before considering whether student debt cancellation of that or any magnitude is a good idea, we should first ask whether the president in fact has the authority to cancel student debts.
The place to start is with the Constitution, which says (in Article II) that “the executive Power shall be vested in a President of the United States of America.” It says nothing about “executive orders,” but going back to George Washington, presidents have issued such orders, meant to direct subordinates in the executive branch in carrying out their duties. …
… [T]he legality of an order to cancel a huge swath of student debt is doubtful and, if it were to be done, the order would be open to legal challenge. To declare debt relief that would cost the U.S. Treasury many billions of dollars is arguably just as much a violation of the president’s authority as if he were to unilaterally declare sweeping tax exemptions.
Thus, if Biden were to issue an executive order to cancel student loan debts, he would almost without question be inviting a legal battle.
But putting aside the legality of student debt cancellation, it is a good idea? Both from the left and the right, the answer is a resounding “No.”
From the left, economist Justin Wolfers calls it the “Worst. Idea. Ever.” In a Freakonomics post written several years ago, he explained why.
