Will I get student loan forgiveness? Will Joe Biden cancel my student loans?
Here’s what you need to know.
There’s increasing discussion about the potential to cancel student loans next year. However, there’s no guarantee that your student loans will be cancelled or forgiven. That said, Biden has a plan for your student loans. If Biden pursues a student loan agenda, here are three ways that Biden could cancel student loan debt:
1. Cancels student loans through legislation
The traditional way to forgive student loans is through legislation. A member or members of Congress propose legislation to cancel student loans, and Congress votes “yes” or “no” on the proposal. If approved, Biden, as president, could sign any such bill into law. To date, there have been multiple proposals to cancel student loan debt. However, none have become law. These include, among others:
- Forgive up to $30,000 of student loans
- Forgive up to $10,000 of federal student loans
- Forgive up to $10,000 of private student loans
- Forgive up to $10,000 of student loans for borrowers directly impacted by the Covid-19 pandemic
- Cancel all $1.6 trillion of student loans, including both federal and private student loans
The top question about forgiving student loans in Congress is which party will control Congress in the next legislative term. Sen. Mitch McConnell (R-KY) and Sen. Chuck Schumer (D-NY) will lead their respective parties, but it’s not yet clear whether Republicans or Democrats will control the Senate. If Republicans control the Senate, there will be divided government and the prospect of student loan forgiveness may decline. If Democrats control the Senate, the chances of student loan forgiveness may be higher.
MORE FOR YOU
2. Cancel student loans in a stimulus package
The second option is to cancel student loans in a stimulus package. This process also would occur in Congress through legislation, but it differs from the first option, which would be separate, standalone legislation. If student loan forgiveness is included in a broader stimulus package, it’s possible that both parties may agree to cancel student loans. There are many different economic priorities in a stimulus bill, including second stimulus checks, unemployment benefits and state and local aid, among other priorities. Student loans likely are not at the top of the economic wish list for Republicans or Democrats. Most Democrats support some form of student loan forgiveness, but most would prioritize second stimulus checks or enhanced unemployment benefits ahead of student loans. If Republicans considered any form of student loan forgiveness (separate from existing federal programs such as Public Service Loan Forgiveness), Republicans may limit the amount of forgiveness, whether any forgiveness is tied to the Covid-19 pandemic, and which borrowers may qualify.
3. Cancel student loans through executive action
This third option is the most controversial of the three options, even though some have claimed it’s relatively straightforward and easy to implement. Their argument goes something like this: the Higher Education Act, which is congressional legislation that includes student loans, authorizes the U.S. Secretary of Education (who is part of the executive branch of the federal government) to cancel student loan debt. Opponents of this argument claim that under Separation of Powers, only Congress (the legislative branch) has the “power of the purse,” and therefore only Congress can decide whether to cancel student loans. Schumer and Sen. Elizabeth Warren (D-MA) proposed legislation to grant President Donald Trump legal authority to cancel up to $50,000 of student loans. However, Congress has not passed any such legislation, and if Republicans continue to control the Senate, the proposal likely will not pass either. If Biden used executive action to cancel student loans, there would likely be legal challenges (based on a Separation of Powers argument), which could delay any such student loan forgiveness for borrowers.
Presidential candidate Biden supported student loan forgiveness on the campaign trail. However, there is no guarantee that Biden will cancel student loans as president. When Biden becomes president on January 20, 2021, he may face a struggling economy, weak jobs market and ongoing Covid-19 pandemic. As president, Biden will weigh several comprehensive economic approaches. This may include student loans, but he also may focus on other economic measures. If Biden acts to forgive student loans, either through legislative or executive action, there is also no guarantee that it happens on the first day of his presidency or even within the first 100 days.
Pay off student loans
Will I get student loan forgiveness? It’s a popular question and many borrowers are counting on student loan forgiveness. However, don’t expect student loan forgiveness. Biden or Congress may cancel student loans, but there is no guarantee if or when. In the meantime, focus on a strategy for student loan repayment. Here are good places to start to pay off student loans, all of which have no fees: