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Student loan borrowers and the Too Much Talent Band thank President Joe Biden and Vice President Kamala Harris for extending the student loan pause while demanding that they cancel student debt at a gathering outside the White House on January 13, 2022, in Washington, D.C.

Student loan borrowers and the Too Much Talent Band thank President Joe Biden and Vice President Kamala Harris for extending the student loan pause while demanding that they cancel student debt at a gathering outside the White House on January 13, 2022, in Washington, D.C. (Photo: Paul Morigi/Getty Images for We The 45 Million)

'Cancel It, Don't Means Test It!' Omar Says of Student Debt

Progressive lawmakers and other critics continue to warn the Biden administration against the "logistical nightmare" of limiting debt cancellation by income.

Jessica Corbett

Congresswoman Ilhan Omar on Monday echoed recent criticism of the Biden administration's secretive attempts to limit student debt cancellation based on income and instead called for full loan forgiveness for federal borrowers.

"Cancel it, don't means test it!" tweeted the Minnesota Democrat, pointing to Politico reporting from Friday.

Fellow "Squad" member and a leading student debt cancellation advocate Rep. Ayanna Pressley (D-Mass.) had responded similarly to the reporting on social media Saturday.

"Income is not wealth. If you have student debt, you need relief in the form of cancellation—period," said Pressley, adding that President Joe Biden "must #CancelStudentDebt and be as broad and inclusive as possible."

Politico reported that implementing a debt relief program that involves means testing would be a "nightmare" because the U.S. Department of Education (DOE) lacks income information for most of the 45 million federal borrowers:

The Internal Revenue Service has relied on Americans' prior-year tax information to dole out benefits tied to income, such as stimulus checks and Democrats' expanded Child Tax Credit payments. The Education Department, by contrast, does not have access to that trove of income data. Federal law tightly restricts how the IRS can share taxpayer information with other agencies.

The result, Education Department officials have concluded, is that the agency is unable to cancel federal student loans based on a borrower's income level without requiring some action from the borrower. Department officials have told the White House they would need to set up some sort of application process to determine whether borrowers qualify for relief, according to the people familiar with the discussions.

That added layer of bureaucracy would likely take longer for the Education Department to implement compared with across-the-board forgiveness, and it would mean that borrowers would miss out on the benefit if they don't know to sign up or apply for it.

"Another potential pitfall: A crush of borrowers all at once seeking to find out whether they're eligible for some loan forgiveness could also overwhelm the call centers of the Education Department's contracted loan servicers, who have reduced staffing over the last two years since most federal loan repayments have been frozen," Politico added.

David Dayen warned in The American Prospect earlier this month that "we have a severe problem with how we finance higher education. If the program that tries to finally spur the political class to action on fixing it ends up a failure, the problem will just metastasize. Those are the stakes for getting student debt relief wrong. And means testing is a perfect way to do that."

In response to recent reporting that Biden was weighing means testing, the Debt Collective argued in a petition that "student loan debt is already means-tested by design: The rich have no student debt. And the government's ongoing issues with their failing relief programs show those don't work, either. We need to cancel all student loan debt."

Progressives in Congress have made similar points the past few days.

"The average federal student loan debt balance is $37,014," said Rep. Pramila Jayapal (D-Wash.), chair of the Congressional Progressive Caucus. "Canceling student loan debt will provide a lifeline to millions of Americans, lifting this crushing weight. It's time to cancel federal student loan debt."

Rep. Ro Khanna (D-Calif.) highlighted that about 40% of people with student debt don't have their college diploma and declared that "canceling student debt is about helping the working and middle class."

Both Khanna and Barbara Lee (D-Calif.) pointed out that the vast majority of people with student loan debt didn't go to Ivy League Schools. Lee asserted that "canceling student loan debt is not a windfall for the rich. It's a lifeline for working Americans."

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