President Joe Biden (Photo by Anna Moneymaker/Getty Images)
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Rep. Alexandria Ocasio-Cortez says student loan cancellation must happen now.
Here’s what you need to know — and what it means for your student loans.
Student Loans
Student loan cancellation should be front and center. That’s the message that progressive Democrats in Congress want President Joe Biden to hear sooner rather than later. Ocasio-Cortez (D-NY), along with Sen. Elizabeth Warren (D-MA) and other progressive members of Congress, has been a leading voice to pressure the president to cancel student loans for borrowers. Failure to act, according to some Democrats, could have disastrous consequences in the upcoming midterm elections.
Democrats say failure to cancel student loans would be a disaster
For Ocasio-Cortez, wide-scale student loan cancellation is among her top priorities for her party in the November election. She has called student loans “ridiculous” and says that Biden has complete power through executive orders to enact wide-scale student loan cancellation. Without student loan cancellation imminently, Ocasio-Cortez argues that Democrats could lose their majority in Congress. “The president has not been using his executive power to the extent that some would say is necessary,” Ocasio-Cortez recently told the New Yorker. “And I can’t underscore how much the hesitancy of the Biden administration to pursue student-loan cancellation has demoralized a very critical voting block that the president, the House, and the Senate need in order to have any chance at preserving any of our majority.”
(Student loan refinancing drops to ridiculously low rates).
Student loan forgiveness: what’s at stake
Specifically, Ocasio-Cortez supports cancelling up to $50,000 of student loans for borrowers, which Warren and Senate Majority Leader Chuck Schumer have proposed in the U.S. Senate. (That said, student loan cancellation was reduced to $25,000 for student loan borrowers with a new proposal). However, Congress has yet to pass any legislation which would accomplish this goal. (Here’s who won’t get student loan forgiveness). Slim majorities in each house of Congress as well as limited support even from those within the Democratic Party mean wide-scale student loan cancellation may never become legislation. This could change depending on the outcome of the November election. However, to pass such legislation in the next Congress, progressive Democrats would need to win a substantial number of seats in each house, which doesn’t appear likely given the electoral map. That’s why progressives are pinning their hopes on Biden, who they believe can enact wide-scale student loan cancellation without congressional action. The issue is that the president doesn’t agree. Biden, who has already cancelled $15 billion of student loans for borrowers, says he doesn’t believe he has executive authority to enact wide-scale student loan cancellation for most or all student loan borrowers. The president supports $10,000 of student loan cancellation, but wants Congress to pass legislation, which he has promised to sign. (Where Biden stands on student loan cancellation).
Student loan forgiveness could be reason Democrats lose the midterm election
Student loan forgiveness could be the reason that Democrats lose the midterm election. However, it depends. Why? There are two ways to consider student loan cancellation and its potential impact on the election. (If you don’t qualify for Navient student loan forgiveness, try these options). If you view student loan cancellation through a progressive lens, it may be a top issue heading into the election. Supporters view student loan cancellation as a springboard to financial freedom, a pathway to homeownership, and a fresh start that would spearhead marriage and family formation. Without student loan forgiveness, some progressives may feel misled when they were expecting student loan cancellation. If you view student loan forgiveness through a moderate or conservative lens, you may believe there are more important economic issues on which Democrats should focus. You may believe that if the president enacts wide-scale student loan cancellation, it could alienate independent and moderate voters who view student loan cancellation as wasteful government spending and a massive wealth transfer. Rather than bolster Democrats’ chances at the polls, this constituency may view any potential action as yielding the opposite result. (Biden should end student loan relief).
Student loans: next steps
Student loans will restart payments soon. It’s unlikely that Biden will cancel student loans in the near-term. The safest bet is to prepare now for student loan repayment and not expect any wide-scale student loan relief. Make sure to understand all your options, including how to pay off student loans faster.
Here are some popular options to save money:
