There’s still some hope that President Joe Biden enacts student loan cancellation.
Here’s what you need to know.
Student Loans
Student loan cancellation wasn’t included in Biden’s $6 trillion budget and it was also dropped from Biden’s infrastructure plan. However, despite the latest developments on student loan forgiveness, it’s still possible that Biden cancels student loans. Here are 4 ways you could still get student loan forgiveness:
1. Biden has legal authority and cancels student loans
Did student loan cancellation get cancelled? It may feel that way, given that there has been no wide-scale student loan cancellation. However, Biden has asked the U.S. Department of Education to conduct a legal analysis on the president’s ability to enact wide-scale student loan cancellation without further authorization from Congress. That analysis was expected “within weeks,” but that was nearly three months ago. While the Trump administration concluded that a president cannot unilaterally enact wide-scale student loan forgiveness by executive order, the Biden administration may reach a different conclusion. If the Education Department concludes that Biden has such legal authority, then Biden could proceed to cancel student loans. This is the easiest path to wide-scale student loan cancellation. Importantly, if Biden cancels student loans, it’s possible his action may be challenged in court, which could delay any implementation of wide-scale student loan forgiveness. While the Education Department can provide legal analysis, it would be non-binding as a matter of law absent determination from a court.
2. Biden doesn’t have legal authority for student loan cancellation, but he cancels student loans
Another scenario is that the Biden administration agrees with the Trump administration and determines that the president does not have legal authority to enact wide-scale student loan cancellation without further authorization from Congress. While this may be the expected outcome, Biden still could proceed to cancel student loans. “[Biden will] look at that legal authority,” White House Chief of Staff Ron Klain said in March. “He’ll look at the policy issues around that, and he’ll make a decision.” For example, Biden could agree with Sen. Elizbeth Warren (D-MA), who asserts that the Higher Education Act of 1965 already granted the president the legal authority. Even if Biden’s action to cancel student loans is challenged in court, Biden could proceed to cancel student loans anyway.
3. Biden enacts student loan cancellation on targeted basis
Student loan cancellation is not a “win” or “lose” policy issue. There is wide-scale student loan forgiveness in which all or many student loan borrowers get their student loan cancelled. For example, if Biden cancels up to $50,000 of student loans, then 36 million borrowers would get their federal student loan debt completely cancelled. There is also targeted student loan cancellation in which a sub-section of student loan borrowers get student loan forgiveness for a specific reason. Biden has already cancelled at least $2.3 billion of student loan debt. (You can learn if you qualify for the $2.3 billion of student loan forgiveness here). First, Biden cancelled $1 billion of student loans for 72,000 student loan borrowers and second, he cancelled another $1.3 billion of student loans for 41,000 borrowers with total and permanent disability. America has reacted to Biden’s student loan cancellation in different ways, but Biden is likely to continue cancelling student loans for student loan borrowers, even if he doesn’t cancel everyone’s student loan debt. In some cases, this type of student loan cancellation could be greater than $10,000, which is the amount of wide-scale student loan cancellation Biden has proposed.
4. Biden works with Congress on student loan forgiveness
There are two main paths to student loan cancellation. The first is through Biden as president using an executive order, and the second is the more traditional path through Congress. While Biden is no longer a U.S. senator, he understands the Senate better than any other president in modern history. To date, Congress has been unable to reach consensus on a legislative proposal on student loan cancellation. It’s possible that Biden can work with Democrats and Republicans on broader higher education reform, which could include some student loan forgiveness.
Student loan cancellation: next steps
The immediate next step for wide-scale student loan cancellation is for the Education Department to present its legal conclusions on the president’s ability to enact wide-scale student loan cancellation. This memo could be presented soon, and it could determine whether wide-scale student loan forgiveness is a reality. There are several reasons why Biden is unlikely to cancel student loans, but the possibility still remains.
If you have student loans, make sure you make the best financial decision for you. Here are some smart options to consider:
- Student loan refinancing (lower interest rate, lower monthly payment)
- Income-driven repayment plans (lower monthly payment for federal loans)
- Public service loan forgiveness (student loan forgiveness for federal loans)
Student Loans: Related Reading
Biden will review student loan forgiveness—Here are 5 potential changes
Don’t expect any student loan cancellation
Democrats propose to forgive student loans with 4 changes
Student loan cancellation faces major setback
"that" - Google News
June 09, 2021 at 09:23PM
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4 Ways That Biden Enacts Student Loan Cancellation - Forbes
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