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Student loan cancellation could look more targeted than broad-based.

Here’s what you need to know — and what it means for your student loans.

Student Loans

President Joe Biden could be on the cusp of canceling student loans for millions of student loan borrowers. If he proceeds with student loan forgiveness, it could be life-changing for a generation of Americans. While many people are expecting student loan cancellation for most student loan borrowers, the outcome could be far different. Rather than broad-based student loan relief, Biden student loan forgiveness could look a lot more like targeted student loan forgiveness only to specific groups of borrowers.


Student loan forgiveness won’t be for everyone

The term “wide-scale student loan forgiveness” is often used to describe any plan for student loan cancellation. In common parlance, it’s regularly assumed that most student loan borrowers will have get their student loans canceled. However, that’s not true. (No, Biden is not canceling most student loan debt). For example, Sen. Bernie Sanders (I-VT) proposed the most pure form of student loan forgiveness. That is, Sanders wants all student loans — including both private and federal student loans — canceled. Congress didn’t support the Sanders plan. Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) proposed a more limited form of student loan forgiveness. Their proposal would cancel up to $50,000 of student loans for borrowers. While their plan would cancel student loans for 36 million federal borrowers, nearly 9 million student loan borrowers would still have student loans after student loan cancellation. Congress didn’t support this plan either. Biden too said that he won’t cancel $50,000 of student loans, which means even more student loan borrowers won’t get full student loan cancellation. So, if Biden cancels student loans, millions of student loan borrowers could be excluded. (4 reasons your student loans may not get canceled).


Student loan forgiveness: who qualifies

Who qualifies for student loan forgiveness? While Biden hasn’t formally decided whether he will cancels student loans, expect some limitations if Biden proceeds with student loan forgiveness. As a general rule, the more requirements, the less likely there will be wide-scale student loan forgiveness. At a minimum, expect only federal student loan borrowers to qualify. Second, Biden, who has canceled $17 billion of student loans, could limit student loan forgiveness to college student loans only. That means student loan borrowers with graduate student loans could be excluded. Biden could limit eligible student loan borrowers based on income. While the Biden administration floated $125,000 as a potential cut-off, recipients of the Covid-19 stimulus checks has a $75,000 income threshold. Last week, Warren highlighted two other groups of student loan borrowers who should get student loan forgiveness. This includes recipients of Social Security whose wages are being garnished to pay student loans and student loan borrowers who attended college but never earned a degree. Biden has multiple variables from which to choose, which could limit who qualifies for student loan relief.

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Student loans: next steps

If Biden cancels student loans, he could impose several limits on who qualifies for student loan cancellation. The more variables he imposees, the more targeted student loan forgiveness becomes. This sways the pendulum away from wide-scale student loan forgiveness in favor of more student loan relief for specific groups of borrowers. In particular, Biden could focus on specific student loan borrowers who are financially vulnerable has been Biden’s primary strategy as president.

Importantly, student loan borrowers should be looking beyond potential student loan forgiveness and focus on the end of temporary student loan relief. Are you prepared? Here are some ways that you can save money on your student loans:


Student Loans: Related Reading

Biden confirms he won’t cancel $50,000 of student loans—5 key takeaways

Student loan forgiveness: 5 key takeaways from major announcement

3 ways Biden could cancel student loans

Student loan forgiveness: who could qualify under Biden’s plan

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