Here’s where President Joe Biden stands on student loan cancellation.
Here’s what you need to know — and what it means for your student loans.
Over the last few weeks, it’s become increasingly apparent where Biden and his administration stand on wide-scale student loan cancellation. Here’s the latest:
1. Biden is considering options for student loans, including student loan relief
It’s clear that the Biden administration is actively evaluating options for student loan borrowers. After extending student loan relief three times for a total of 15 months, it’s clear that Biden understands the financial burden of paying student loans. The U.S. Department of Education has said that it’s examining ways to ensure a smooth transition to the restart of federal student loan payments. There is special focus on student loan borrowers who are in student loan default or student loan delinquency or who are struggling financially to make student loan payments. While there could be additional student loan relief, it may not be the same student loan relief that includes temporary student loan forbearance and no accrual of new student loan interest. (Student loan forgiveness could be the reason that Democrats lose the midterm elections).
2. Biden is prepared to cancel $10,000 of student loans for millions of borrowers
Biden is prepared to cancel $10,000 of student loans for millions of student loan borrowers. However, that doesn’t mean he will use any executive action to cancel student debt. Rather, Biden has called on Congress to enact wide-scale student loan forgiveness through legislation. Biden has said that he will sign any legislation on student loan forgiveness that Congress sends to his desk. To date, despite rhetoric on social media, Congress has not passed any legislation on wide-scale student loan forgiveness. (Here’s who won’t get student loan forgiveness).
3. Student loan relief is ending May 1, 2022
Temporary student loan relief will end May 1, 2022. After three extensions, the Biden administration has said several times that student loan payments for federal student loans will restart on May 1. (How federal student loans will change this year). On this date, student loan interest also will begin to accrue and student loans in default will be subject to collection. While the press release announcing this third extension did not label it as “the final extension,” the Biden administration has advised student loan borrowers to prepare to resume making student loan payments. “Obviously, as we get closer to the timeline in May, we will have to make a decision about what’s next, and we’ve obviously been clear about what we’re preparing for,” White House Press Secretary Jen Psaki said Wednesday. “But the president’s going to make these decisions based on what we’re seeing in economic data and what we feel is certainly needed at the time.”
4. Biden has cancelled $15 billion of student loans
Whether you support or oppose wide-scale student loan cancellation, one thing is clear. Biden has cancelled $15 billion of student loans since becoming president. This includes student loan forgiveness under existing federal programs for borrowers with a total and permanent disability, borrowers who are pursuing public service loan forgiveness, and borrowers who have been misled by their college or university under borrower defense to repayment. Biden’s clear preference to date has been targeted student loan cancellation, which is providing student loan relief to specific groups of student loan borrowers. Supporters of wide-scale student loan cancellation welcome this student loan forgiveness, but say it’s only a fraction of the $1.7 trillion of total outstanding student loan debt. (Here are 7 ways to get a lower student loan payment).
5. Biden didn’t promise to cancel everyone’s student loans
No, Biden didn’t promise to cancel student loans for everyone. There seems to be a misconception that as a presidential candidate, Biden said he would cancel student loan debt for all borrowers, if he was elected president. However, that’s not exactly what happened. As a presidential candidate, Biden supported $10,000 of student loan cancellation for borrowers. His support for this policy was based on the ability of Congress to pass legislation. For example, he has supported legislative proposals for wide-scale student loan cancellation such as the bill proposed by Sen. Elizabeth Warren (D-MA). However, Biden disagrees with Warren’s proposal to cancel up to $50,000 of student debt for borrowers.
What this means for your student loans
Here’s what this means for your student loans. While progressive Democrats will continue to pressure Biden on implementing wide-scale student loan forgiveness, a few things are clear. First, you should expect federal student loan payments to restart on May 1. Second, there may be additional student loan relief, but it may target certain student loan borrowers and not include no federal student loan payments. Third, targeted student loan cancellation may continue. However, it doesn’t appear that Biden has any immediate plans to enact wide-scale student loan cancellation without legislation. There are no guarantees for what happens next with student loans, but this is a good base framework from which to plan and make decisions. Make sure to understand all options available to you.
Here are some popular ways to save money and pay off student loans faster: