AOC Insists Joe Biden Can Forgive Student Loans by Executive Order Despite Constitutional Questions

Representative Alexandria Ocasio-Cortez wants President-elect Joe Biden to forgive student loans through an executive order when he takes office early next year, though there are constitutional questions around his powers to do so.

Biden has not said he will cancel student loan debt. During the presidential campaign, his proposal was to cancel up to $10,000 of student loan debts but this would not apply to all borrowers and may not cover private loans. He is now under pressure to go further.

In two short Instagram videos on Tuesday, the New York Democrat said it was possible to relieve students of loan debt and she suggested there may not be a limit to the amount forgiven. "No, it is not a pipe dream at all," Ocasio-Cortez said in response to a question.

"And most importantly is that it can be done by executive order, which means Biden would not need [Senate Majority Leader] Mitch McConnell or the Republican Senate to forgive people's student loans."

"The key is that we need to push him," she said.

In a second video, Ocasio-Cortez addressed whether all student loans would be forgiven or just certain amounts.

"It really depends," she said. "The easiest and fastest type of loans to forgive right off the bat are federal student loans.

"When it comes to amounts, it really depends on what an elected official wants to do. There's a lot of numbers but nothing hard and fast."

Ocasio-Cortez isn't the first Democrat to suggest that Biden could forgive student loans through executive action. Senators Chuck Schumer and Elizabeth Warren have said up to $50,000 in debt per borrower could be eliminated in this way.

Schumer and Warren introduced a resolution explaining "how the President should use executive authority to cancel student loan debt and ensure there is no tax liability for Federal student loan borrowers resulting from administrative debt cancellation."

Speaking about borrowers in New York on Tuesday, Schumer told Long Island's News 12: "They worry about how they're going to buy a car, how they're going to buy a home, how they're going to start a family, and even worry about what job to go into.

"Because sometimes you may want to go into a job that doesn't pay as well as another job. But this student debt, this student debt stands in the way."

However, there are unresolved constitutional and legal questions about a potential executive order on student loan debt.

As Forbes personal finance contributor Zack Friedman argued on November 16, the U.S. Constitution gives Congress control of the "purse strings" and any attempt to wipe out loans through executive action would likely be challenged in the courts.

It is not clear if the Secretary of Education has broad powers to cancel student loans under the Higher Education Act, as Warren and Schumer have suggested.

There is also an important distinction between federal student loans and those held by private lenders. Even if Biden has the authority to forgive the federal loans, dealing with private loans may only be possible through an act of Congress.

Rep. Alexandria Ocasio-Cortez (D-NY)
Rep. Alexandria Ocasio-Cortez (D-NY) questions Postmaster General Louis DeJoy during a hearing before the House Oversight and Reform Committee on August 24, 2020 in Washington, DC. Ocasio-Cortez has said student loan debt could be forgiven by executive order. Tom Williams-Pool/Getty Images