President Joe Biden has now canceled $25 billion of student loans.
Here’s what you need to know — and what it means for your student loans.
Biden has now canceled more student loan debt than any president in U.S. history. While the president has focused on targeted student loan forgiveness, wide-scale student loan relief has eluded student loan borrowers. Last week, the White House said the president hasn’t decided whether to cancel $10,000 of student debt for borrowers. Biden could have announced a potential plan for student loan cancellation last Saturday when he delivered the commencement address at the University of Delaware. However, the president did not refer to student loan forgiveness during his remarks. Now, student loan borrowers are wondering whether the president will proceed to use executive authority to cancel student loans for most or all student loan borrowers. Or, will the president continue to focus on targeted student loan forgiveness?
Biden has canceled $25 billion of student loan debt
Biden has canceled $25 billion of student loans for 1.3 million student loan borrowers. This includes:
- Borrower Defense To Repayment: $7.9 billion for 690,000 borrowers for borrower defense to student loan repayment and school closures.
- Public Service Loan Forgiveness: $7.3 billion for more than 127,000 student loan borrowers through public service loan forgiveness.
- Permanent Disability: More than $8.5 billion for more than 400,000 borrowers who have a total and permanent disability.
This student loan forgiveness includes $5.8 billion of student loan debt that Biden canceled this week. The Biden administration also has made major changes to income-driven repayment that will help more student loan borrowers qualify for student loan forgiveness.
Student loan borrowers wondering when Biden will cancel student loans
Student loan borrowers and advocates are pushing the president to decide whether to enact wide-scale student loan forgiveness for millions of student loan borrowers. In late April, Biden said he would decide within weeks. However, that was nearly five weeks ago — and Biden hasn’t commented further on the next steps for student loan forgiveness. This has left student loan borrowers in student loan limbo. The Biden administration floated $10,000 of student loan forgiveness with potential income caps of $150,000 for individuals and $300,000 for married or joint filers. Biden also said he’s not considering $50,000 of student loan forgiveness. The notion of income caps and limited student loan forgiveness hasn’t resonated well with progressive members of Congress as well as leading advocates. (It also hasn’t resonated well with these people, who likely won’t qualify for student loan forgiveness). They argue that Biden should cancel more student debt for most or all student loan borrowers. It’s possible Biden reconsiders and cancels up to $50,000 of student loans. This is the proposal that Sen. Elizabeth Warren (D-MA), Senate Majority Leader Chuck Schumer (D-NY) and countless civic and social organizations have supported. However, the base case assumption is that Biden will support $10,000 of student loan cancellation with income caps. If Biden proceeds with broad student loan relief, he should answer these 5 serious questions on student loan forgiveness.
Student loans: next steps
How can you qualify for student loan forgiveness? For now, it’s a waiting game to determine whether Biden enacts broad student loan forgiveness. That said, there are several options to get student loan forgiveness from existing federal programs. For example, there’s student loan forgiveness available now through income-driven repayment, borrower defense to repayment, public service loan forgiveness, teacher loan forgiveness and other programs. The good news is that this student loan relief is available regardless of whether Biden proceeds with wide-scale student loan forgiveness. You should evaluate all your options for student loan repayment, particularly as temporary student loan relief ends on August 31, 2022. Here are some good places to start:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)