Is Student Loan Forgiveness Dead?
Student loan forgiveness will not be included in President Biden’s annual White House budget, further diminishing hopes for a complete cancellation of $ 10,000 loans, let alone $ 50,000. As long as options remain – Congress, executive action – it seems more likely that loan forgiveness will only be expanded through reforms to existing loan relief programs. Here’s what you need to know.
What Happens to Student Loan Forgiveness?
Biden said he supported canceling the $ 10,000 student loan debt secured by the federal budget, but that it should be passed through Congress, saying in February City Hall, “I don’t think I have the authority.” However, a few weeks ago, he instructed the US Department of Education to review its legal authority to write off student loan arrears through an executive order.
But, as higher education expert Mark Cantrowitz told CNBC , this could be a way for Biden to hand over responsibility to Congress, which he has always preferred:
“Only after he receives this report, which I expect to find that he has no legal authority, will the ball go to the court of Congress.”
The only problem with getting through Congress is that there is no indication that the student forgiveness law has enough support to pass, as there is no consensus on how much forgiveness should be forgiven, even among Democrats . With the Senate at an impasse between Republicans and Democrats, Congress looks like a path that Democrats are avoiding, at least for now.
So what are President Biden’s plans for student loan forgiveness?
On Monday, the Department of Education announced a regulatory review process that could change the rules for existing federal student loan programs, including:
- Borrower protection until maturity
- Extracts for complete and permanent disability
- Income payment plans
- Public Service Loan Forgiveness (PSLF)
In the wake of President Biden’s recent administrative action that led to simplified disability layoff qualifications and a $ 1 billion debt write-off under the Borrower Protection Program to repay , it seems likely that the reforms will do more of the same, making it easier for existing borrowers to either pay off debt (through the lower payment requirements supported by Biden), or pay off loans. While these types of regulatory reforms do not need congressional approval, the process will take a long time, perhaps up to a year (first hearings will begin in June ).
So is student loan forgiveness dead?
Not really. If you are delaying your student loan payments because you are waiting for forgiveness, you can wait a little longer, at least until the student loan moratorium expires (we discussed your options earlier in this Lifehacker post ).
Education Minister Miguel Cardona recently suggested that the pause in student loan payments would not be extended beyond September 2021, but he did not rule out that either. Of course, you can also keep paying your student debt, but as long as you don’t pay interest, it doesn’t hurt to wait until October.