Borrowers are confused by the civil war in the Democratic Party over student loan forgiveness. Mario TamaBorrowers are stuck in limbo after a civil war broke out within the Democratic Party about cancelling student-loan loans.Pelosi and Biden both stated that Congress has the power to cancel student loans, not the president.Sens. Sens.Check out more stories from Insider's business page.Many student-loan debt borrowers currently remain in limbo due to the growing civil war within Democratic Party.After an 18-month reprieve and zero interest accrual, federal student loan holders will have to pay their loans again at the end of September. The pause helped millions of borrowers to stay financially afloat during pandemic. However, the impending lift and rising interest rates come at a time when highly contagious Delta variant is sweeping across the US.Borrowers had their fingers crossed that all of their debt (or a portion thereof) would be paid off by fall. It's becoming increasingly clear that widespread student loan forgiveness will not be possible in the near future, with only two months before payments resume.While President Joe Biden campaigned for $10,000 per person in student debt cancellation, he hasn't given any clear timeline since becoming president. He did not include cancellation in his stimulus plan or infrastructure plan nor his budget. Democratic lawmakers have tried to get him to cancel $50,000 per person with his executive powers.Biden stated that Congress has the power to cancel student loans, and not the president. His Democratic peers, such as Sens. Elizabeth Warren and Chuck Schumer argue that Biden has the executive power to accomplish this. This discrepancy has led to a growing divide between Democrats, which has left borrowers confused.Biden claims he does not have the authority to erase student debtContinue the storyBiden requested the Education and Justice Departments review his legal authority for a borrower to be exonerated of $50,000 in student loans by executive order. Biden rejected the plan of Warren and Schumer to erase $50,000 student-loan debt per borrower in February.He said, "I will not make it happen," to a CNN audience. He also stated that loan forgiveness depended on whether the borrowers attended private or public colleges. "I am willing to forgive $10,000 of debt, but not $50. "I don't believe I have the authority."According to him, it is possible that the president could use his executive power to cancel student loans. However, it seems unlikely that he would do so.President Biden stated that he does not have the authority cancel student loans. Photo by Jim Watson/AFP via Getty ImagesContinue reading: Biden is evaluating the legality to cancel $50,000 of student debt for millions. There is still no word after several months.Biden also requested Miguel Cardona, Education Secretary, to prepare a memo on the legal authority of the president to forgive $50,000 per student loan. White House Chief Of Staff Ron Klain said to Politico. Klain stated that Biden would "look at that law authority."Six months later, the White House continues to review the legality of Biden being able to cancel student loans. Insider reached out to the Justice Department and the Education Department for comment about the memos. The White House did not respond.Nancy Pelosi, House Speaker, recently supported Biden's assertion that he does not have the power cancel student-loan loans. During a press conference, she stated that student debt was "a policy topic" and that cancelling it had to be an act of Congress."People believe that the president is able to forgive debt. He does not," Pelosi said. Pelosi stated, "He can delay, he can postpone, but he doesn't have that power."Others believe that Biden should simply 'flick his pen.But Schumer and Warren have stood firm against Pelosi and Biden's claim that the president doesn't have the authority to eliminate student debt. They have maintained their belief that the Higher Education Act would allow Biden to do this since he took office.Senators have been promoting student-loan forgiveness to close the racial wealth disparity and boost the economy. They are urging Biden not to wait for the results of the reviews to make their case.Schumer stated to reporters that there was very little the president could do without a pen, and that cancelling $50,000 of student debt would be the best way to boost our economy. This statement came back in February after Biden rejected the $50,000 proposal. "This is one thing the president can do alone."Warren pointed Insider previously to a letter sent by the Legal Services Center of Harvard Law School, which detailed the legal authority of the Education Secretary to cancel student loans.Senator Elizabeth Warren has criticised Biden for failing to cancel student debt and said he doesn’t need Congress. GREG NASH/POOL/AFP via Getty ImagesContinue reading: Millennials will be screwed again if Biden does not cancel student-loan loansWarren said to Insider that President Biden could cancel $50,000 student loan debt by simply using a pen. He doesn't have to wait for Congress to act. He can do it himself, and that's what I believe he will do.In a press conference last month, Schumer and Warren argued that student-debt relief would close the racial wealth gaps and stimulate the economy. Schumer stated that Biden needs to "flick his pen" to make America more successful and happier.Warren likened student debt to a sword that hangs over the heads and shoulders of borrowers. She said, "Everyday that passes, that sword draws closer." This sword can be removed by the president of the United States. This pain can be prevented by the president.Rep. Alexandria Ocasio Cortez joined the opposition and called upon Biden for his power. She tweeted earlier this year, "The case against student loans forgiveness is looking weaker by the day." "We have the Senate Majority Leader on board for $50k forgiveness. Biden is holding back, but many arguments against it simply don't stand up when you really look at them.Borrowers are left hanging after a civil warTwo growing factions of the Democratic Party are represented in the student-debt cancellation controversy: Pelosi and Biden versus Warren & Schumer. Experts disagree about who holds the power.Mark Kantrowitz is an expert on student loans and has written bestselling books about the subject. He previously stated to Insider that if departments conduct these reviews they will find that Biden "doesn't have that authority" under Section 103 of the Higher Education Act. Insider was also informed by Seth Frotman (executive director of Student Borrower Protection Center), that the Higher Education Act clearly states that the Education Secretary has the authority to cancel debt.Millions of borrowers are stuck in limbo due to the civil war that has erupted over who has authority to eliminate student debt and how.Biden is certain to have made progress toward reducing America's $1.7 trillion student debt problem.He extended the payment pause to September from January; published a regulatory agenda to improve student loan forgiveness programs by 2022; cleared billions of dollars of debt through the Department of Education for borrowers who were defrauded in fraud by for-profit schools or borrowers with disabilities.However, this left billions of unpaid debt, as Insider's Ayelet Scheffey reported. Only 0.2% of student loans have been repaid so far.Both the legal review process and the return of borrowers to pay their debt are on the horizon. There is little evidence that their debt will be erased by the end of the countdown, despite the split within the Democratic Party.Business Insider has the original article.
