President-elect Joseph R. Biden Jr. is facing pressure from congressional Democrats to cancel student loan debt on a vast scale, quickly and by executive action, the New York Times reported. Biden has endorsed canceling $10,000 in federal student debt per borrower through legislation, and insisted that chipping away at the $1.7 trillion in loan debt held by more than 43 million borrowers is integral to his economic plan. But Democratic leaders, backed by the party’s left flank, are pressing for up to $50,000 of debt relief per borrower, executed on Day 1 of his presidency. More than 200 organizations — including the American Federation of Teachers, the N.A.A.C.P. and others that were integral to his campaign — have joined the push. The Education Department is effectively the country’s largest consumer bank and the primary lender, since 2010, for higher education. It owns student loans totaling $1.4 trillion, so forgiveness of some of that debt would be a rapid injection of cash into the pockets of many people suffering from the economic effects of the pandemic. Many economists, including liberals, say higher education debt forgiveness is an inefficient way to help struggling Americans who face foreclosure, evictions and hunger. The working poor largely are not college graduates — more than 70 percent of currently unemployed workers do not have a bachelor’s degree, and 43 percent did not attend college at all, according to a report by the Committee for a Responsible Federal Budget.
Congressional Democrats yesterday introduced legislation overhauling the U.S. bankruptcy system to make it friendlier to consumers while opening the door to student-loan cancellation, among other proposals, the Wall Street Journal reported. Sen. Elizabeth Warren (D-Mass.) and House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.) said that the proposed bill would streamline bankruptcy filings for individuals and families and reduce filing fees while addressing racial and gender disparities in how bankruptcy laws are applied. Some Democrats, including Sen. Warren, for years have been keen on changing the nation’s consumer bankruptcy laws, which last underwent a major amendment in 2005. President-elect Joe Biden’s election victory raised the odds of a significant revision, though any such proposal would face obstacles in a closely divided Senate. Control of the upper house, which now has 50 Republicans and 48 Democrats, will be determined by the two pivotal Georgia runoff races on Jan. 5. The Consumer Bankruptcy Reform Act of 2020 follows a framework put forth by Sen. Warren during the Democratic presidential primary that was later endorsed by President-elect Biden on the campaign trail. The legislation would create a new consumer bankruptcy option, chapter 10, replacing the current chapter 7 and chapter 13 routes individuals use to either liquidate or restructure their debts. Chapter 10 would let filers wipe out all unsecured debt, with narrow exceptions such as child support or debts incurred by fraud. Borrowers could also create repayment plans specific to different types of debt, including medical and credit card debt, as well as home mortgages and car loans. (Subscription required.)
https://www.wsj.com/articles/democrats-warren-and-nadler-float-consumer…
Click here to read the full bill text.
http://ct.symplicity.com/t/wrn/903126e8d662ad20ab57861668e9c2c7/3769411…
Joe Biden promised he would push to cancel a significant portion of Americans’ student debt during his presidential campaign. Fulfilling this promise entails politically fraught decisions over how to do it and who would benefit, the Wall Street Journal reported. Biden, a Democrat, campaigned on forgiving hundreds of billions of dollars of student debt, starting with a $10,000 write-off for all 43 million Americans with federal loans. Some congressional Democrats and activist groups are pushing him to go further, forgiving most or all of the $1.6 trillion in student debt. Student debt is the largest type of debt held by Americans after mortgages. The amount has tripled since 2007. Defaults are high. Many economists say that canceling at least some debt would boost the U.S. economy by reducing borrowers’ bills, leaving them with more money to spend on homes and cars, or even starting businesses. To move forward, the Biden administration has to choose how broad or targeted to make the debt reductions, risking helping groups seen as undeserving and widening political fault lines between those with college degrees and those without.
