President Biden could announce a plan to cancel student loans this Saturday.
Here’s what you need to know — and what it means for your student loans.
After months of waiting for potential student loan forgiveness, Biden finally could make a major announcement that will impact millions of student loan borrowers. Here are 3 reasons why Biden could make an announcement this Saturday to cancel student loan debt.
Student loan forgiveness: here’s why it could happen on Saturday
There are at least three reasons why Biden could cancel student loans for millions of student loan borrowers this Saturday.
- First, Biden is delivering the commencement address at the University of Delaware on Saturday. A college graduation ceremony could be an ideal platform for Biden to announce wide-scale student loan cancellation.
- Second, Delaware is Biden’s home state, and he is a graduate of the University of Delaware. The familiar turf provides the home-court advantage to announce a major policy decision on education.
- Third, on April 28, 2022, Biden said he would announce a decision on whether to enact wide-scale student loan cancellation within weeks. Since that was four weeks ago today, Saturday would align roughly with that timetable.
- Bonus: Temporary student loan relief expires on August 31, 2022. If Biden announces wide-scale student loan cancellation now, that would give the U.S. Department of Education three months to implement student loan forgiveness before student loan payments restart.
Student loan cancellation: how much student loan debt could Biden cancel
How much student loan debt could Biden cancel? Biden has made two key statements on wide-scale student loan cancellation that could provide a basis for any student loan relief. First, Biden has said he wants to cancel up to $10,000 of student loan debt for student loan borrowers. Since the 2020 presidential election, Biden has called on Congress to pass legislation to cancel student debt. Since Congress hasn’t acted, Biden could proceed with student loan cancellation of that amount. Second, Biden has said he’s not considering up to $50,000 of student loan cancellation. This is a major disappointment for progressive Democrats in Congress, such as Sen. Elizabeth Warren (D-MA), and Senate Majority Leader Chuck Schumer (D-NY), who both have championed $50,000 of student loan forgiveness. If Biden cancels student loans, the most likely amount is $10,000, although the president could select a higher amount that is still below $50,000.
Will everyone get their student loans canceled?
Will everyone get their student loan canceled? No. If Biden announces wide-scale student loan cancellation, many student loan borrowers could be disappointed because they may not qualify for student loan forgiveness. While Biden hasn’t announced the requirements for wide-scale student loan cancellation, the Biden administration has referenced a potential maximum income threshold of $125,000 of annual income. That’s the same income threshold that Warren and Schumer included in their legislative proposal for student loan forgiveness. However, this amount is $50,000 higher than the income threshold to get a Covid-19 stimulus check. Republicans have criticized wide-scale student loan forgiveness as wealth redistribution that disproportionately benefits wealthier Americans. Biden also could limit student loan forgiveness only to federal student loan borrowers. Finally, Biden could target student loan relief to student loan borrowers who are struggling financially, which could suggest a lower income requirement. (Student loan cancellation could mean end of student loan relief).
Student loan forgiveness could be delayed
There’s no guarantee that Biden announces wide-scale student loan cancellation on Saturday. Why? Here are several reasons. First, Biden could decide not to enact wide-scale student loan cancellation. Biden has canceled more than $17 billion of student loans since becoming president. He may prefer to pursue targeted student loan cancellation. Alternatively, he may focus on improving current student loan forgiveness programs and student loan repayment options. Second, Biden could not have the legal authority to enact wide-scale student loan forgiveness. After a careful legal review, Biden could decide that even if he proceeds with student loan cancellation, the U.S. Supreme Court could block any attempt to cancel student loans for all or most student loan borrowers through an executive order. Third, Biden could delay an announcement on student loan forgiveness until a later date. The midterm election is November 8, and temporary student loan relief ends on August 31. Biden could wait until closer to either of those dates. If Biden proceeds with student loan cancellation, he may not extend temporary student loan relief. In that scenario, make sure you’re ready for student loan payments to restart beginning September 1, 2022. Here are some popular ways to get prepared and pay off student loans faster:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)