The White House says there’s no decision yet on wide-scale student loan forgiveness.
Here’s what you need to know — and what it means for your student loans.
White House Press Secretary Karine Jean-Pierre told reporters aboard Air Force One Tuesday that President Joe Biden has not made a decision whether to cancel student loans. “We have no policy to announce yet,” Jean-Pierre said, referring to student loan cancellation, according to the Daily Mail. “But as a reminder, no one has been required to pay a single dime of student loans since the president took office.” It has been nearly two weeks since Biden said he was considering wide-scale student loan forgiveness through executive action. However, Biden still hasn’t indicated whether he will cancel student loans for millions of student loan borrowers.
Student loan forgiveness: the latest
Based on Biden’s most recent comments, he could announce imminently whether he will cancel student loans. There’s no guarantee that Biden will forgive student loans for most or all student loan borrowers. For example, Biden confirmed he won’t cancel most student loans, and that includes up to $50,000 of student loan cancellation. That said, he is seriously exploring whether he can use executive authority to cancel some student debt. There is wide speculation about who will qualify for student loan relief. For example, there may be potential income limits to qualify for student loan cancellation. The Biden administration floated a $125,000 income threshold to qualify, although that amount hasn’t been finalized. In comparison, the stimulus checks in response to the Covid-19 pandemic had a $75,000 income threshold. If Biden chooses an income threshold higher than the stimulus checks, the Biden administration will need to explain why student loan borrowers would get a higher income limit than everyday Americans who got a stimulus check. Biden could impose additional limitations on student loan forgiveness, including, for example, possible restrictions that only federal student loans or college student loans would qualify.
Student loan relief: Biden and Congress approach student loan forgiveness differently
Biden campaigned on $10,000 of student loan forgiveness, although he didn’t say he would cancel student debt directly. Rather, he called on Congress to pass legislation to cancel student loans. To date, Congress hasn’t passed any wide-scale student loan cancelaltion of any amount. Progressives in Congress such as Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) still want Biden to cancel up to $50,000 of student loans. They believe that Biden has existing legal authority to enact wide-scale student loan cancellation without congressional approval. With their plan for student loan forgiveness, student loan borrowers would get a fresh start with their student loans, the economy would be stimulated, disparities would be reduced, and borrowers would have a better shot at the American Dream. Republicans in Congress largely have opposed student loan forgiveness, calling it wealth redistribution, “terrible” policy, and generally unfair to the 80% of adult Americans who don’t have student loans or didn’t go to college. Bill Maher has called student loan forgiveness a “loser issue,” while the New York Times editorial board called student loan forgiveness for everyone a “bad idea.” Student loan cancellation also could end the student loan payment pause, which means more than 40 million student loan borrowers could restart student loan payments beginning September 1, 2022. With the potential end of student loan relief, every student loan borrower needs to understand all available options for their student loans. Here are some of the best ways to pay off student loans and save money:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)