What happened to the cancellation of student loans?
This is what you need to know.
It seemed like a foregone conclusion: With the rise of President Joe Biden, the cancellation of student loans was finally taking place. Yes, there was a debate about the amount of student loan forgiveness – $ 10,000, $ 50,000 or some other amount – but the expectation of many was that your student loans would be canceled. As a presidential candidate, Biden asked Congress to cancel $ 10,000 in student loans immediately as a result of the Covid-19 pandemic. Instead of drafting a bill to cancel student loans, however, Congress turned Biden around and began pushing him to enact cancellation of student loans. For example, Senate Majority Leader Chuck Schumer (D-NY) and Senator Elizabeth Warren (D-MA) have been pushing Biden to cancel up to $ 50,000 of student loans based on an interpretation of the Act. of Higher Education of 1965. Biden, it seems, never intended to cancel student loans unilaterally by executive order, nor did he campaign by virtue of that promise. Biden, a lawyer and former United States senator, understood that only Congress (not the president) has the power to enact large-scale student loan cancellations. That said, Biden, in good faith, agreed to request the U.S. Department of Education to conduct a legal review of his authority as president to unilaterally cancel student loans without further authorization from Congress.
But then this happened.
What Happened to the Student Loan Forgiveness Legal Review?
In March, White House Chief of Staff Ron Klain confirmed that the Department of Education was reviewing Biden’s ability as president to enact the cancellation of student loans by executive order. At the time, Klain said the legal review would be completed in a few weeks. “You’ll see that legal authority,” Klain said, referring to Biden. “He will look at the policy issues related to that and make a decision.” The review would likely include the following:
However, almost three months later, the legal review has not materialized and there has been no announcement about the cancellation of large-scale student loans.
Student loan cancellation removed from infrastructure package and budget
Since the announcement that there would be a legal review, there have been several developments regarding student loan forgiveness. However, none of them have been a positive indication that a student loan forgiveness will occur. For example:
Taken together, these actions (or inactions) suggest that Biden will not enact the cancellation of student loans.
Student Loan Cancellation: Next Steps
There is still some hope that your student loans will be canceled. While the legal memorandum has not been finalized, there is still a chance the Department of Education finds a legal avenue for the president to enact large-scale student loan write-offs. Legally, it is an uphill battle for the president to cancel student loans, but never say never. The Trump administration found that a president cannot unilaterally cancel student loans without additional approval from Congress, but the Biden administration may come to a different conclusion. Even if there is no large-scale student loan forgiveness, Biden will likely pay off student loans in a specific way. For example, you’ve already paid off at least $ 2.3 billion in student loans. Biden canceled $ 1 billion in student loans for 72,000 student loan borrowers, and secondly, he canceled another $ 1.3 billion in student loans for 41,000 permanently and totally disabled borrowers. So at the very least, expect there to be a student loan cancellation, but it may not be the type of student loan cancellation where all student loan debt is canceled or all student loans are canceled.
If you have student loans, now is the perfect time to review your options. Student loan payments are expected to restart on October 1, 2021, so make sure you are prepared for student loan payments. Here are some great places to start: