Will student loans get cancelled?
Here’s what you need to know.
A new survey shows what Americans think about plans to cancel student loans. There are several proposals about cancelling student loan debt, and Americans have many questions about student loan debt cancellation and who would benefit. Data For Progress asked respondents these 5 questions, and some of the answers are surprising:
1. Should every student loan borrower get $50,000 of student loan forgiveness?
Americans are divided on whether every student loan borrower should get up to $50,000 of student loan forgiveness. Sen. Elizabeth Warren (D-MA) and Senate Minority Leader Chuck Schumer have proposed cancelling $50,000 of student loans for every borrower.
2. Should every loan borrower get $50,000 of student loan forgiveness if they earn less than $125,000?
This is the same question, but with an eligibility limit based on income. If student loans are cancelled, one possibility is that not everyone would get student loan forgiveness. For example, Schumer revised his and Warren’s initial proposal to cancel student loans, and now says that borrowers can’t earn more than $125,000 per year.
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“This has a limit…if your income is above $125,000, it doesn’t affect you,” Schumer said when asked if student loan borrowers who are “well off” should have their student loans cancelled. “Thank you for asking that—I forgot to mention it. It only affects middle class and poorer students.”
3. Should borrowers get $10,000 of student loan forgiveness each year (up to five years) through the Public Service Loan Forgiveness program?
Biden has called on Congress to cancel student loans immediately. This proposal conditions cancelling student loans based on public service loan forgiveness. Currently, the Public Service Loan Forgiveness programs forgives federal student loans for borrowers who make 120 monthly payments and work full-time for a qualified public service or non-profit employer and meet other requirements. Respondents are more willing to support this proposal, since borrowers are performing public service or non-profit work in exchange for cancelling student loans. President Donald Trump and U.S. Secretary of Education have called for the end of the Public Service Loan Forgiveness program. They favor student loan forgiveness through income-driven repayment plans. President-Elect Joe Biden would continue the program, although he supports the $10,000 a year for five years student loan forgiveness plan. In contrast, under the current Public Service Loan Forgiveness program, borrowers can get all their federal student loan debt cancelled.
4. Should all student loans be cancelled?
Americans are divided whether all student loans should be cancelled. Sen. Bernie Sanders (I-VT) proposed cancelling all $1.6 trillion of student loans, including both federal student loans and private student loans. Surprisingly, nearly half of respondents in this survey support cancelling all student loans. While cancelling all student loan debt may be welcomed by current student loan borrowers, others have argued there are many reasons not to cancel student loans. For example, two-thirds of adult Americans don’t have student loans or didn’t go to college. Similarly, cancelling current student loans doesn’t help future borrowers or address the cost of higher education.
5. Should Biden use an executive order to cancel student loans?
Should Biden use an executive order to cancel student loans? Borrowers were asked if they would support Schumer and Warren’s plan to have Biden, through an executive order, cancel up to $50,000 of student loans for borrowers earning less than $125,000. In this question, respondents had to choose which statement more closely matched their viewpoint:
- Support: “[Biden] should forgive this student debt. In the midst of the coronavirus pandemic and an economic downturn, this is relief Biden can provide to roughly 50 million middle class families on day one — without waiting for Congress to finalize a larger aid package.”
- Oppose: “[Biden] should not forgive this student debt. This could cost upwards of $1 trillion and when that much money is being spent it’s important Congress be involved. Besides, this money is better spent elsewhere. Well-paid lawyers and doctors don’t need a handout.”
Supporters say cancelling student loans will provide economic stimulus in the midst of the Covid-19 pandemic, help low income and middle class families, and reduce inequality. Opponents say cancelling student loans is prohibitively expensive for taxpayers, unfairly benefits wealthier student loan borrowers and funds could be directed elsewhere for greater economic impact. A couple of interesting takeaways on this question:
- Undecided: 15%
- Gender: More females support cancelling student loans than males
- Age: 45% of respondents age 45 and older oppose cancelling student loans. Only 54% under age 45 support cancelling student loans based on this hypothetical.
Pay Off Student Loans
Will you get student loan forgiveness? You may not if you earn more than $125,000. You also may not get any student loan forgiveness if Congress chooses not to cancel student loans and Biden doesn’t act through an executive order. What’s the best way to pay off student loans? Here are 3 ways to pay off student loans, all of which have no fees: