Biden’s plan for canceling student loans – 7 questions
Will President Joe Biden Cancel Your Student Loans?
Here’s what you need to know – and what it means for your student loans.
Here are 7 questions about Biden’s plan for student loan cancellation:
1. Will my student loans be canceled?
The answer is: it depends. Progressives in Congress want to write off student loan debt. Many moderate Democrats in Congress do not support large-scale student loan cancellation. Republicans in Congress oppose large-scale student loan cancellation. Biden, who is a former US senator, supports the cancellation of a $ 10,000 student loan, but he wants Congress to write off the student loan debt. There are political arguments in support and in opposition, but there are other factors that could influence a decision. For example, there are legal and political considerations. The evolution of the Covid-19 pandemic and the state of the economy could also influence whether Congress or the President believes that a large-scale student loan cancellation is necessary at this point. Biden’s original proposal for student loan cancellation was not really related to student loan cancellation in general. Rather, it was linked to the economic difficulties resulting from the Covid-19 pandemic. As more people get vaccinated and more businesses reopen, the Biden administration and members of Congress will look to economic and health statistics to inform their decision.
2. Will Congress cancel student loans?
There are two main avenues for canceling student loans. The first route is through Biden, as president, who hopes student borrowers will write off student loans by executive order. The second and more traditional route would be for Congress to pass legislation canceling student loans. Based on the latest update on student loan cancellation, the main proposal in Congress from Senate Majority Leader Chuck Schumer (D-NY) would cancel up to $ 50,000 in student loans. However, Schumer does not have enough voice to pass a law to cancel student loans, whether for $ 10,000 or $ 50,000. While a contingent of progressive Democrats back $ 50,000 in student loan cancellations, most Democrats don’t and no Republican does. Therefore, do not count on the cancellation of student loans by Congress. However, Congress could work in a bipartisan fashion to reform student loan cancellation with these 4 changes.
3. When will Biden cancel student loans?
There could be an announcement about canceling a student loan – one way or the other – any day. In early April, Biden said he would ask the US Department of Education to review its legal authority to write off student loan debt. At the time, White House chief of staff Ron Klain said he expected to receive the education department’s legal brief in the coming weeks. Referring to Biden, Klain said, “He will look into this legal authority. He’ll look at the policy issues around that, and he’ll make a decision. The memo should explore various areas related to the forgiveness of student loans:
However, do not hope. There are at least 5 signs that Biden will not embrace student loan cancellation.
4. Are you eligible for a student loan forgiveness?
Deciding to cancel student loans is one thing; who gets their student loan forgiven is another. Even if there is a large-scale student loan cancellation, not everyone will qualify. For example, under Schumer and Warren’s plan, only federal student loans are eligible and student borrowers must earn less than $ 125,000 per year. Any final decision to cancel student loans could include limits on the amount of student debt, type of student loans, income, debt-to-income ratio, and other criteria. Biden has already canceled at least $ 2.3 billion in student loans since becoming president. (You can find out here if you are eligible for this student loan cancellation). First, Biden canceled $ 1 billion in student loans for 72,000 student borrowers, and second, he canceled an additional $ 1.3 billion in student loans for 41,000 totally and permanently disabled borrowers. America reacted in different ways to the cancellation of Biden’s student loan. So far, Biden has strategically focused on helping specific groups of student loan borrowers rather than large-scale student loan forgiveness. It is possible that this trend will continue, as Biden seeks to take a piecemeal approach to student loan cancellation.
5. Does Biden have the legal authority to cancel student loans?
Will your student loans be canceled? Legally, no. It would be difficult, but not impossible, for the Biden administration to show that the president has unlimited unilateral power to order the cancellation of student loans. Progressives say Biden has the existing legal power to unilaterally cancel student loans without further authorization from Congress. However, Biden has repeatedly stated that he does not believe he has the legal authority to act unilaterally without explicit authorization from Congress. There are several reasons why Biden may not have legal authority. For example, the wording of the higher education law is ambiguous and does not explicitly state that the education department has unilateral authority. It is unlikely that members of Congress in 1965 would have given the executive full power to write off all student loan debt. Courts also prefer clear statutory language before one branch of government usurps the power of another, especially on a controversial topic like large-scale student loan cancellation. Second, under the Property Clause and the Approval Clause of the U.S. Constitution, the executive branch cannot cancel debt that is owed to the federal government without an explicit statutory subsidy from Congress. Third, while Congress created a credit for issuing student loans, Congress did not create an explicit credit for student loan cancellation, which might be required before Biden seeks to enact student loan cancellation. in large scale.
6. How much student loan forgiveness will I get?
The two most popular student loan cancellation amounts are $ 10,000 and $ 50,000. Biden offered a $ 10,000 student loan forgiveness and called on Congress to immediately cancel $ 10,000 in student loans for student borrowers. Warren and Schumer proposed a $ 50,000 student loan cancellation, which the US Department of Education said would wipe out all federal student loan debt of 36 million student borrowers. Importantly, these student loan forgiveness amounts are “up to” these threshold amounts. For example, if you have $ 8,000 in student loans, you will only get $ 8,000 in canceled student loans. However, there can be no assurance that these proposals will be adopted. There could be a lower student loan forgiveness or no student loan forgiveness at all. Biden has repeatedly said he does not support up to $ 50,000 in student loan cancellations and that he is unlikely to change his position. So Congress should pass legislation to write off that amount of student loan debt, because Biden won’t do it through executive order.
7. Does Biden support other student loan forgiveness?
Biden wants to cancel student loans in three ways. First, in addition to large-scale student loan cancellation, Biden also wants to cancel student loans for student borrowers who attend four-year public colleges and universities and whose families earn less than $ 125,000 a year. He also wants to cancel student loans for student borrowers at historically black colleges and universities (HBCU) and institutions serving minorities (MSI). Biden also simply wants income-based repayment plans so that student loan borrowers only pay 5% of their discretionary income. This change would reduce your monthly student loan payment and help you get your student loan forgiven sooner. Finally, Biden would also rework the Public Service Loan forgiveness program to provide for a $ 50,000 student loan forgiveness after just five years of skilled employment (60 monthly student loan payments) from the current 10-year requirement. (120 monthly student loan payments).
Student loan cancellation: next steps
We should know soon if Biden will cancel student loans. The results of the Department of Education’s legal note could make or break your chances of a student loan forgiveness. There is no guarantee that you will get your student loan forgiven, and the chances of you doing so are relatively low. Overall, whatever the outcome, make sure you have a student loan game plan.
If you have student loans, you have several options to pay off student loans faster. Here are some potential options, all at no cost: