Will a multibillion-dollar student loan handout impact inflation?
Stanford School of Business lecturer Dave Dodson joined 'Your World' to weigh in on the White House dismissing concerns a $300 billion student loan handout will worsen inflation.
President Biden on Wednesday announced a massive handout of at least $10,000 in debt reduction for some student loan borrowers -- but it’s a move that he once doubted that he had the authority to enact.
Biden announced Wednesday that he will deliver on a campaign "commitment" to cancel up to $10,000 of federal student loan debt for certain borrowers making less than $125,000 per year, and up to $20,000 for Pell Grant recipients, while extending the pause on federal student loan payments through the end of the year.
Biden said during remarks at the White House Wednesday that by resuming student loan payments that have been frozen during the COVID pandemic "at the same time as we provided targeted relief," his administration is taking an "economically responsible course."
The national debt, according to the Treasury Department, currently sits at $30.7 trillion.
BIDEN ANNOUNCES STUDENT LOAN HANDOUT AS NATIONAL DEBT SOARS
President Biden waves after returning to the White House in Washington, Wednesday to announce his student loan forgiveness plan. (AP Photo/Susan Walsh)
The move immediately renewed questions about whether the executive can make such a grant legally -- or if it is an authority solely in the power of the Congress.
While some Democrats like Senate Majority Leader Chuck Schumer have claimed that Biden can abolish student debt "with the flick of a pen," Biden himself has long been skeptical of the executive holding such an ability.
As president-elect, Biden gave a list of executive orders he wishes to pursue, but noted that a student debt handout was not one of them.
"That’s different than my saying, and I’m going to get in trouble for saying this…for example, it’s arguable that the president may have the executive power to forgive up to $50,000 in student debt," he said. "Well, I think that’s pretty questionable. I’m unsure of that. I’d be unlikely to do that."
In February 2021, Biden was asked about a handout that would be up to $50,000 -- as lawmakers like Schumer have called for.
"I’m prepared to write off a $10,000 debt, but not 50...Because I don’t think I have the authority to do it by signing the pen," he said.
According to Politico, White House officials later clarified that his reference to the $10,000 of loan forgiveness was "not meant as a descriptor for executive action but to reflect his endorsement of achieving that goal through legislation."
PELOSI FLIP-FLOP: SPEAKER PRAISES BIDEN ‘HISTORIC’ STUDENT DEBT HANDOUT DESPITE HE LACKED AUTHORITY
However, Congress has seemed unlikely to pass a student loan bill, given Republican opposition and the 50-50 split in the Senate, as well as a limited Democratic majority in the House.
House Speaker Nancy Pelosi had been similarly skeptical of executive authority on the matter.
"People think that the President of the United States has the power for debt forgiveness; he does not," Pelosi said in July last year. "He can postpone, he can delay, but he does not have that power. That has to be an act of Congress."
But by Wednesday, Pelosi and Biden both had a change of heart, with Pelosi praising the "historic" move by the president.
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Meanwhile the administration was working to make the argument that the handout was on solid legal footing ahead of likely legal challenges.
The Justice Department argued Wednesday that the HEROES Act of 2003 gives the administration "sweeping authority" to reduce student debt during a national emergency, "when significant actions with potentially far-reaching consequences are often required."
Fox News’ Brooke Singman and The Associated Press contributed to this report.
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