Here’s why a large-scale student loan forgiveness is even less likely now.
Here’s what you need to know.
President Joe Biden and the US Department of Education announced a game changer this week on student loan cancellations. This new student loan forgiveness will change the future of loan forgiveness for the public service. (Are you eligible for a student loan forgiveness of $ 4.5 billion?) While at least 550,000 student loan borrowers will receive a student loan forgiveness sooner, what does that mean? for a large-scale student loan forgiveness? The answer: a large-scale student loan forgiveness is even less likely. It might sound surprising, but here’s why you shouldn’t expect large-scale student loan cancellation:
1. The latest student loan cancellation is another example of targeted student loan cancellation
The major changes to the civil service loan cancellation will cancel at least $ 4.5 billion in student loans. The latest student loan cancellation is another example of targeted student loan cancellation (in this case for government officials). Since becoming president, Biden has focused exclusively on targeted student loan cancellation (which benefits a particular group of student loan borrowers) rather than large-scale student loan cancellation (which benefits most or all student loan borrowers). There is a consistent pattern in Biden’s approach to student loan forgiveness, and none of the student loan cancellations to date have looked like a full-scale student loan forgiveness for all student loan borrowers.
2. Biden wants to fix student loans, but does not enact large-scale student loan cancellations
Biden wants to fix student loans, but not necessarily embrace full-scale student loan cancellation. Biden supports up to $ 10,000 for large-scale student loan cancellations, but Biden says Congress needs to cancel student loans and the president signs the bill. (Biden is ready to sign student loan cancellation, but Congress hasn’t passed any laws). Since Biden doesn’t believe he has the legal authority to write off a student loan on a large scale for every student loan borrower, Biden chose to fix the student loan cancellation rather than just write off all the debts. student loan. It is important to note that “student loan cancellation” and “student loan repair” are not necessarily compatible. You can think of it this way: The good news is that Biden wants to fix your student loans and your student loan forgiveness. However, the bad news is that Biden wants to fix your student loans and your student loan forgiveness. Why? “Fixing Student Loans” suggests improving existing student loan cancellation programs so that they can function properly. The major changes with the cancellation of civil service loans announced this week represent that approach. This is very different from the large-scale cancellation of student loans, which does not solve the underlying problem (the high cost of a university education), but simply seeks to provide limited and temporary relief on student loans. Thus, Biden can continue to focus on optimizing existing and sub-optimal student loan cancellation programs. (Even if there is a large-scale student loan forgiveness, these student borrowers would be excluded).
3. Biden reinforced that he did not have the legal authority to cancel student loans
When deciding to write off more student loan debt, Biden did not use the so-called legal authority that Senator Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D- NY) say Biden can use to cancel everyone’s student. ready with the stroke of a pencil. On the contrary, by actively choosing a targeted student loan forgiveness with the civil service loan forgiveness program, Biden reinforced that he did not have the legal authority to cancel student loans on a large scale. If Biden had the legal authority to cancel everyone’s student loans, Biden could have canceled the federal student loan debt of all public servants. However, this is not what happened. (If Biden isn’t canceling your student loans, do these 3 things). Instead, Biden relaxed requirements program so that more student loan borrowers can get automatic student loan forgiveness. However, this was not a full-scale student loan cancellation. On the contrary, this student loan discount was based on requirements. Each student loan borrower still made 120 monthly student loan payments, including meeting other requirements. While some requirements to qualify for student loan relief were “relaxed,” student loan borrowers still had to pass a litmus test to obtain student loan relief.
4. Student loan cancellations were “for a reason”, not just because student loans are too expensive
Biden canceled more than $ 11.5 billion in student loans. (Here’s how to get approved for a student loan forgiveness). It is important to note that in each specific case, the reason for this student loan cancellation was not the reason that many supporters of student loan cancellation wanted their student loan debt paid off: the high cost. a college education. For example:
Defense of the borrower to repayment: student loan borrowers have been misled by their college or university. ($ 1.5 billion student loan cancellation)
Total and permanent disability: student loan borrowers have a total and permanent disability that prevents them from repaying their student loans. ($ 5.8 billion in student loan cancellations)
Cancellation of public service loan: make 120 monthly payments and commit to 10 years of employment with a qualified public service or not-for-profit employer. ($ 1.7 billion automatic student loan cancellation, with at least $ 2.8 billion additional student loan cancellation)
In contrast, there has been no large-scale student loan cancellation solely on the basis of financial burden, disparities, economic recovery, debt tree transformation, or retirement savings. . Again, the Biden administration has focused on leveraging existing student loan programs to benefit more student loan borrowers rather than simply canceling student loans more broadly.
At the end of student loan relief from the Covid-19 pandemic, you will need a student loan repayment game plan. Make sure you understand all of your options. Here are some popular ways to save money with your student loans: