3 things Biden student loan cancellation means for your student loans
Joe Biden’s Cancellation Student Loan Means These 3 Things.
Here’s what you need to know.
Last week, Biden canceled $ 6.8 billion in student loans. That brings his total student loan cancellation to nearly $ 9.6 billion since he became president in January. (Find out here if you qualify for an $ 8.7 billion student loan cancellation). Here are 3 things Biden student loan cancellation means for your student loans:
1. Student loan cancellation was not a large-scale student loan cancellation
Biden focused entirely on targeted student loan cancellation rather than large-scale student loan cancellation. A targeted student loan cancellation means that specific groups of student loan borrowers have received student loan forgiveness. Large-scale student loan cancellation means every student loan borrower or most student loan borrowers get a student loan forgiveness. To date, Biden has canceled student loans for two categories of federal student loan borrowers. This includes totally and permanently disabled student loan borrowers and student loan borrowers who have been misled by their college or university under the borrower’s defense against forgiveness of their student loan.
2. Large-scale student loan forgiveness is less likely
For many student loan borrowers, it looks like the student loan cancellation has been reversed. After months of waiting for the cancellation of the student loan, it never came. While Biden has actively canceled student loan debt, Biden has not adopted large-scale student loan cancellation. Biden supports $ 10,000 student loan cancellation for student loan borrowers, but he said Congress should write off student loan debt. Senator Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) have defended cancellation of student loans up to $ 50,000 for student loan borrowers, but legal issues remain . Student loan cancellation may help more student loan borrowers, but that doesn’t mean Biden will cancel everyone’s student loans. While it is possible that Biden could enact both a targeted student loan cancellation and a full-scale student loan cancellation, there is no clear indication that he will adopt the latter. The US Department of Education prepared a legal analysis and recommendation on the president’s ability to unilaterally cancel student loans without further authorization from Congress, but this non-binding memorandum was not made public. Biden has successfully canceled student loans on a targeted and piecemeal basis, and there is no indication that he will stop doing so. Canceling student loans has become a priority at Capitol Hill. However, at the same time, it appears that Congress has not given priority to canceling student loans. For example, Congress is on the verge of passing a landmark budget deal, but large-scale student loan cancellation has been ruled out – again.
3. Biden commits to reducing student loans
Even though student loan borrowers are frustrated by the lack of initial, large-scale student loan cancellations, Biden is committed to student loan relief. (Here’s how Biden will continue to focus on student loans and student loan cancellation). In addition to more than $ 9 billion in student loan cancellations, Biden has twice extended the Cares Law student loan relief (the $ 2.2 trillion stimulus package owed to Covid-19) , resulting in temporary forbearance of student loans with no new interest accrued to the student loan borrowers for an additional year. Biden also said he is committed to simplifying income-driven repayment plans, which also result in federal student loan forgiveness after 20 years (undergraduate student loans) or 25 years (graduate student loans). He also wants to fix the civil service loan forgiveness program so that more student loan borrowers can be eligible for student loan cancellation. The Department of Education is also holding hearings on student loans and is expected to implement changes that may help more student loan borrowers get financial relief.
Make sure you understand all of your student loan relief options. The initial student loan cancellation likely won’t be available to everyone, so make sure you have a student loan repayment game plan. If you have student loans, here are some popular options for saving money: