As Per Forbes Magazine
President Joe Biden has now cancelled nearly $3 billion of student loan debt.
Here’s what you need to know—and what it means for your student loans.
Since becoming president in January, Biden has cancelled more than $2.8 billion of student loans, including another big announcement for student loan cancellation today:
- Biden cancelled $1 billion of student loans for 72,000 student loan borrowers.
- Biden cancelled another $1.3 billion of student loans for 41,000 borrowers with total and permanent disability.
- Biden granted student loan relief for 1.1 million student loan borrowers who defaulted on their FFELP Loans.
- Today, Biden cancelled $500 million of student loan debt for 18,000 student loan borrowers under the borrower defense to student loan repayment rule.
Student loan cancellation: What America thinks
Student loan cancellation: Supporters
Supporters of student loan cancellation have been divided on Biden’s actions to cancel student loans. For example, some supporters have cheered Biden’s agenda to enact student loan cancellation. In only five months, Biden has moved quickly to cancel student loans for more than 1 million student loan borrowers. This is in addition to student loan relief such as pausing student loan payments, setting interest rates to 0%, and pausing all collections of student loans in default. From March 2020 to September 30, 2021, the U.S. Department of Education estimates that student loan borrowers will get more than $90 billion of student loan cancellation as a result of student loan relief from the Cares Act stimulus.
Other supporters say Biden hasn’t enacted wide-scale student loan cancellation. These supporters are asking whether student loan cancellation has been cancelled. While they recognize Biden cancelled student loans in specific circumstances, they want student loan forgiveness for all or nearly all $1.7 trillion of student loan debt. Some supporters would be happy with $10,000 of student loan cancellation, while other supporters demand $50,000 of student loan cancellation. While $3 billion is a large headline number, some supporters note that it’s approximately 0.1% of the $1.7 trillion of student loan debt outstanding.
Student loan cancellation: opponents
Opponents of student loan cancellation also have mixed feelings. For example, some opponents of wide-scale student loan cancellation support targeted student loan forgiveness. Why? They understand that student loan borrowers who are permanently disabled or who were victims of fraud should have their student loans forgiven. At the same time, there are opponents of student loan cancellation who don’t want the federal government paying for student loans. These opponents believe that student loan repayment is an individual’s responsibility, not the federal government’s. They view student loan cancellation as a massive wealth transfer from the government to student loan borrowers.
Student loan cancellation: next steps
There will be more student loan cancellation. There are at least four ways that Biden can enact student loan cancellation. Expect more student loan forgiveness. However, student loan cancellation may not be wide-scale or available to every student loan borrower. Progressives in Congress may continue to pressure Biden to enact wide-scale student loan forgiveness. Since becoming president, Biden has been focused on targeted student loan forgiveness for specific constituencies. Expect that trend to continue. The appointment of Richard Cordray to run Federal Student Aid will help ensure that more student loan borrowers who qualify for student loan forgiveness get their student loans cancelled. (You can find out if you qualify for Biden’s student loan forgiveness here). What about wide-scale student loan cancellation? It’s still a possibility, and there will be more clarity once the U.S. Department of Education delivers a legal memo to Biden that will evaluate Biden’s authority as president to cancel student loan debt without further congressional authorization. That said, there are several reason why Biden won’t enact wide-scale student loan cancellation. Today’s announcement is another reminder that student loan cancellation is here to stay, but it might look different than the student loan forgiveness for which many student loan borrowers are hoping.
Make sure you understand all your options for student loan repayment. There are several options to save money and pay off student loans faster: