- Institutional student debt, or debt owned by colleges, come from overdue tuition bills and unpaid fees.
- A growing number of schools are using Biden's stimulus to wipe out that debt broadly for students.
- But the $1.7 trillion student debt crisis is largely owned by the government, which has yet to be canceled.
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The Education Department announced in March that colleges could use funds from President Joe Biden's American Rescue Plan to wipe out debt students owe to their schools, and since then, a growing number of colleges have been doing just that.
But while institutional student debt differs from federal student debt, schools are still removing a barrier to education that the president has yet to do.
Student debt owned by schools
Institutional student debt, or debt owed by students to schools, can take the form of overdue tuition bills and various fines accrued during school, and colleges can hold students' transcripts as collateral for the debt and prevent enrollment in classes until the debt is paid off.
Ithaka S+R, a nonprofit that researches education, estimated last year there could be as much as $15 billion in unpaid balances to colleges and universities.
Delaware State University was the first school to announce it would be using Biden's stimulus to cancel $730,655 in student debt for recently graduated students who faced financial hardships during the pandemic. Antonio Boyle, Vice President for Strategic Enrollment Management, said in a statement at the time that the debt made it difficult for students to rent an apartment and cover additional costs as they prepare for their post-grad careers.
"While we know our efforts won't help with all of their obligations, we all felt it was essential to do our part," Boyle said.
Since then, many schools - particularly Historically Black Colleges and Universities (HBCUs) - have been using stimulus funds to relieve students of institutional debt, but the $1.7 trillion student debt crisis still persists.
Student debt owned by the government
Federal student debt, which makes up the student debt crisis, is owned by the government, which oversees the student-loan companies that collect debt from students. While there is little argument over a school's authority to cancel institutional debt, who can cancel federal student debt remains widely disputed.
Biden campaigned on canceling $10,000 in student debt per borrower, along with canceling debt for students attending public colleges and HBCUs. But, as Insider has reported, he has yet to follow through on those promises, and in a February town hall, he said he does not believe he has the authority to cancel $50,000 in student debt per borrower - a figure being pushed for by many Democrats in Congress.
While Biden has asked the Education and Justice Departments to review his legal ability to cancel $50,000 in student debt using executive action, months have passed and there is still no word on where those reviews stand.
Meanwhile, Massachusetts Sen. Elizabeth Warren and Senate Majority Leader Chuck Schumer are leading the $50,000 push, remaining adamant that Biden can cancel student debt immediately with the stroke of a pen.
"The president has the power to cancel $50,000 in student loan debt right now," Warren previously told Insider. "Senator Schumer and I are going to continue to push for this, but Biden doesn't need any authorization from Congress. He needs to pick up the pen and do it himself."