A new bill in Congress would forgive $25,000 of student loans.
Here’s what you need to know—and it what it means for you.
Rep. Vincente Gonzalez (D-TX) proposed to cancel student loan debt in new congressional legislation aptly called the Student Loan Relief Bill:
- $25,000 of student loan debt forgiveness
- applies to federal student loans only
- no private student loan debt forgiveness
- would cancel $775.5 billion in student loan debt
- could help more than 40 million student loan borrowers
“At $25,000 or less, that gets 70% of American student loan borrowers relief,” Gonzalez told The Monitor. “If you have more than that in student loan debt, then you just discount that $25,000 under my proposal. So it’s a small burden to bear as a country and we’re helping a group of people that are really the young Americans who are trying to improve themselves and get better educated and better trained. At the end of the day, because of this education and training, they’re also able to pay more tax revenues. So in a sense we already will recover all of these resources by their education, but also this brings up income that will be expended into the economy anyway.”
Gonzalez, who amassed nearly $100,000 of student loan debt as a law student, wants Secretary of Education Betsy DeVos to cancel student loan debt. The Texas congressman says that despite all the stimulus packages, college students and young people have not received their fair share. The current state of the economy and the Covid-19 pandemic have not helped borrowers pay off student loans faster.
Cancel student loan debt: proposals
Gonzalez is not the only one in Washington proposing to cancel student loans. His bill, H.R. 8514, joins a litany of other student loan forgiveness proposals, including, among others:
- $1.6 Trillion Debt Forgiveness: Sen. Bernie Sanders (I-VT) proposed $1.6 trillion of student loan forgiveness, including both federal student loans and private student loans
- 95% of Americans: Sen. Elizabeth Warren (D-MA) proposed to cancel student loan debt for 95% of Americans
- $10,000 Debt Forgiveness: Senate Democrats proposed up to $10,000 of student loan debt forgiveness
- $30,000 Debt Forgiveness: House Democrats proposed up to $30,000 of student loan forgiveness
- $50,000 Debt Forgiveness: Warren and Senate Minority Leader Chuck Schumer (D-NY) proposed to grant President Donald Trump authority to cancel up to $50,000 of student loan debt
- $10,000 Debt Forgiveness: The Heroes Act proposed to cancel up to $10,000 of private student loans for borrowers who are struggling financially due to Covid-19
- Former Vice President Joe Biden and Sen. Kamala Harris (D-CA) would cancel up to $10,000 of student loan debt due to Covid-19
Will student loans be cancelled?
This new student loan proposal likely will not become law this year. Even if House Democrats pass this student loan relief, the Senate will not. It’s unclear why this new student loan forgiveness bill was proposed when there are other similar student loans bills pending in Congress. Like other proposals focused on federal student loan forgiveness, this student loan bill seems to differ only in the amount of student loan forgiveness. Given that the Heroes Act references $10,000 of student loan forgiveness, and Biden supports the same level of forgiveness, it’s more likely that if there is any future student loan forgiveness, that it would be $10,000. That said, to date, Congress has not passed any student loan forgiveness and does not plan to pass any student loan legislation during the remainder of this congressional term. While that could change if Democrats win the Senate and the White House, don’t expect anyone to cancel student loan debt in the near-term.
How to pay off student loans
Make sure you have a game plan to pay off student loans. If you’re unsure how to pay off student loans, start with these four options, all of which have no fees: