3 ways Biden could cancel student loans

Here are 3 ways President Joe Biden could cancel student loans.

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

Student loans

Will your student loans be forgiven? That’s the question progressives in Congress are asking. That’s the same question at least some student borrowers are asking, as the student loan payment pause is set to end after May 1, 2022. If you ask Sen. Elizabeth Warren (D-MA), she’ll tell you that the president has existing legal authority to enact large-scale student loan forgiveness. However, Biden remained skeptical and urged Congress to pass legislation that would cancel your student loans.

That said, here are 3 ways Biden could cancel student loans.

1. Biden could enact large-scale student loan forgiveness

Although that would go against his public assertions, there is a scenario in which Biden could cancel student loans on a large scale. (Biden could cancel student loan and suspend student loan payment). Biden could proceed with the cancellation of student loans for borrowers through executive action. This is the scenario that Warren and his colleagues have championed. Biden would likely forgive $10,000 in student loans, rather than the $50,000 Warren is backing. Under Warren’s plan, 36 million student borrowers would have their federal student loans completely forgiven and the total cost could be $1 trillion. Under Biden’s plan, the cost would be less than $400 billion. (Here are 6 major changes to student loan forgiveness). If Biden enacts large-scale student loan forgiveness, there could be challenges over his legal authority. It is not universally accepted that Biden has the legal authority to cancel everyone’s student loans without further congressional approval. Any potential legal challenges could cause a court to delay any implementation of student loan forgiveness.

(The new proposal would extend the student loan payment break and cancel student loans)

2. Biden could increase targeted student loan cancellation

As an alternative to large-scale student loan cancellation, Biden could increase targeted student loan cancellation. Since becoming president, Biden has forgiven $15 billion in student loans. Last week, Biden announced he would forgive $6.2 billion in student loans. Biden’s strategy has been to increase student loan forgiveness for specific constituencies within the larger population of student borrowers. For example, Biden canceled student loans for public servants, borrowers with permanent disabilities, and borrowers who obtained student loan forgiveness under defense of the borrower until repayment. Biden could pursue targeted student loan cancellation and increase the number of eligible borrowers. For example, Biden made major changes to the cancellation of public service loans. Until October 31, 2022, student borrowers applying for Public Service loan forgiveness can complete a limited waiver. This limited waiver will allow them to “count” previously ineligible student loan payments toward public service loan forgiveness requirements.

(Here’s who won’t qualify for $6.2 billion in student loan forgiveness)

3. Biden could cancel student loans for these borrowing students

A third possibility is a hybrid between large-scale student loan cancellation and targeted student loan cancellation. Rather than write off everyone’s student loan debt or focus on one specific type of borrower, Biden could find common ground. For example, Biden could cancel student loans for student borrowers who are in financial difficulty. This could include low-income student borrowers, who are in default or in default. Overall, this could potentially include millions of student borrowers. The Biden administration should determine who would qualify, which may include an income cap or proof of hardship related to the Covid-19 pandemic, for example. Focusing on student borrowers who need student loan relief the most could help combat criticism that student loan forgiveness would benefit high-income earners.

(Biden could extend student loan payment break indefinitely)

Student loans: next steps

Biden has not committed to large-scale student loan forgiveness through executive action. There is also no guarantee that he would forgive student loans through mass forgiveness now or in the future. To date, Biden has asked Congress to forgive up to $10,000 in student debt. That said, hoping for large-scale student loan forgiveness as a primary student loan repayment strategy is not a smart strategy. Evaluate all of your options for obtaining our student loan debt.

Here are some of the best ways to pay off student loans faster:

Student Loans: Related Reading

Here’s who won’t qualify for $6.2 billion in student loan forgiveness

New proposal would extend student loan payment break and cancel student loans

Biden could extend student loan payment break indefinitely

Student loan refinance rates have gotten ridiculously low

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