Why federal student loans need new protections on debt collection

By the Honorable Sheila C. Bair (original source Yahoo Finance)

Democrats have roundly criticized President Trump for making aggressive use of his executive authority and to be sure, the President has repeatedly tested the limits of his constitutional powers. Yet in one area, they are one-upping the President, pressing Joe Biden, if elected, to cancel up to $50,000 of federal student loan debt for millions of borrowers.

Across-the-board debt cancellation would be a highly aggressive use of Presidential power under the Higher Education Act where the authority to “waive, or release” debt appears to be focused on troubled borrowers. But given the drag of $1.5 trillion of federal student debt on our economy, this may well be justified. At the very least, this executive authority should be used to give relief to deeply distressed borrowers, better conforming government debt practices to those of regulated bank lenders.