Monetary loan

For student loan cancellation to happen, Biden has to believe it

For the student loan cancellation to happen, President Joe Biden has to believe it.

Here’s what you need to know – and what it means for your student loans.

Student loans

Student loan advocates, progressive members of Congress, and student loan borrowers are hopeful that Biden will enact full-scale student loan cancellation soon. While Biden has extended student loan relief for another 90 days, advocates really want the student loan canceled. However, for Biden to take unprecedented action and write off student loans for borrowers, Biden must believe at least the following, including that:

Student borrowers in financial difficulty

For Biden to enact a full-scale student loan forgiveness, Biden would have to believe that student loan borrowers are in financial trouble. For there to be a large-scale student loan cancellation, this would not only apply to some student loan borrowers, but should apply to most or all student loan borrowers. (Here are 5 major changes for student loans in 2022). There is no doubt that some segments of the student loan borrower population are struggling financially. For example, student loan borrowers who are unemployed, have past due student loans, or are in arrears may be student loan borrowers who are in financial difficulty. Student loans can be costly for many borrowers, and this intensified during the Covid-19 pandemic. At the same time, Biden would have to weigh the granting of a large-scale student loan forgiveness against any other economic relief he or Congress believes is warranted. For example, this can include mortgage relief, rent relief, or even a fourth stimulus check. Does the Biden administration think student loan borrowers have more financial hardship than homeowners, renters, or ordinary Americans who may not have student loans or have not gone to school? university?

Current student loan relief is insufficient

Biden should believe the current student loan relief is insufficient. Is student loan cancellation the next step? Proponents of large-scale student loan cancellation argue that student loan relief has been helpful temporarily, but student loan cancellation will help student loan borrowers permanently. Biden has extended the Cares Act student loan relief three times – the $ 2.2 trillion stimulus package Congress passed in response to the Covid-19 pandemic. Current student loan relief, which includes no mandatory federal student loan payments, 0% interest rates on federal student loans, and no collections on delinquent student loans, will last temporarily until May 1, 2022. Biden’s extension, combined with Congressional first six months of student loan relief and President Donald Trump’s two extensions, will have provided student loan relief for more than two years. According to the US Department of Education, student loan borrowers collectively saved $ 5 billion per month through student loan relief. (Student loan borrowers will receive $ 15 billion in student loan cancellations).

Income-based repayment plans are insufficient

Biden would have to believe that income-driven repayment plans, which offer student loan forgiveness after meeting requirements, would be insufficient. The President encouraged student loan borrowers to do 3 things to prepare for the restart of student loan payments. This includes enrolling in an income-driven repayment plan for federal student loans. There are four income-based repayment plans: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Revenu Contingent Repayment (ICR). Income-based repayment plans base your federal student loan payments on your discretionary income, family size, and state of residence. Your monthly payment could be as low as $ 0 and you may be eligible for a student loan forgiveness after 20 or 25 years of monthly student loan payments. (What Biden’s Latest Student Loan Relief Means for Your Student Loans).

Existing student loan forgiveness options are insufficient

Biden should believe that existing student loan cancellation options are insufficient. (Here’s who won’t get the student loan waiver). This includes, but is not limited to, cancellation of public service loans, cancellation of teacher loans, and income-based repayment. Biden announced major changes to the civil service loan forgiveness program that will help more borrowers access student loan forgiveness. While these programs target specific types of borrowers and only apply to federal student loans, it’s important to note that there isn’t a student loan forgiveness program for every borrower.

Democrats need student loan forgiveness to win midterm election

For Biden to enact the student loan cancellation, Biden would have to believe Democrats need a full-scale student loan forgiveness to win the midterm election. Student loan advocates have said failure to pass a large-scale student loan forgiveness will alienate young voters, hurting voter turnout and losing Democrats in the midterm election. Opponents say the opposite: This student loan forgiveness could be the reason Democrats lose the midterm election. Why? While student loan borrowers support large-scale student loan cancellation, it is less popular beyond progressive circles. While Democrats hold a slight majority in Congress, independent and moderate voters could play an increasingly important role in the midterm elections. From a political standpoint, the Biden administration should weigh the risk of losing Democratic base voters who have made student loan cancellation a top priority with the risk of alienating independents and moderates who consider the cancellation of large-scale student loans as a redistribution of wealth.

The cost of canceling the student loan does not outweigh the benefits of not forgiving

From a cost-benefit perspective, Biden should believe that the benefits of canceling student loans outweigh the relative costs. For example, supporters claim that the large-scale cancellation of student loans would stimulate the economy and help student borrowers have money to get married, raise a family, buy a house, save for retirement and invest in a company. That said, canceling a student loan could cost up to $ 1,000 billion and up to $ 50,000 in student loans are canceled for student loan borrowers. This cost would drop to about $ 400 billion if up to $ 10,000 were forgiven for student loan borrowers.

Biden has the legal authority to cancel student loans

Large-scale student loan cancellation relies on Biden having the legal authority to cancel student loans for all borrowers. (If you’re waiting for your student loan to be forgiven, do so). The procedural route to cancellation of student loans adopted by Senate Majority Leader Chuck Schumer (D-NY) and Senator Elizabeth Warren (D-MA) is based on Biden’s cancellation of student loans by executive order. According to Schumer and Warren, this power is granted to the president through the Higher Education Act of 1965. However, Biden, a lawyer and former chairman of the US Senate bench, does not believe the president has the unilateral power to pass. large measures. large-scale student loan cancellation without further authorization from Congress. The president, through the US Department of Education, has limited authority to cancel student loans – and Biden canceled $ 12.7 billion in student loans – but that cancellation was effected through programs existing ones authorized by Congress. However, for a large-scale student loan cancellation, the Biden administration would have to believe that Congress – which controls federal spending – unusually waived its constitutional powers and gave the president – a member of the executive – through the Law on Higher Education. unlimited power to cancel all student loans for all student loan borrower.

Whether you support or oppose large-scale student loan cancellation, there is no guarantee that there will be student loan cancellation. Start preparing for the restart of student loan payments now. Here are some popular ways to pay off student loans:

Student loans: related reading

Is Cancellation of Student Debt the Next Step?

Student loan borrowers to receive $ 15 billion in student loan cancellations

Student loans will change in 5 major ways in 2022

Biden extended student loan relief, but advocates really want student loan cancellation