Student loan forgiveness will not be included in President Biden’s annual White House budget, further lowering hopes of a $ 10,000 blanket loan cancellation, let alone $ 50,000. While options remain – Congress, executive action – it seems more likely that loan cancellation will only be extended through reforms to existing loan relief programs. Here’s what you need to know.
What happens with the student loan forgiveness?
Biden said he supported the cancellation of $ 10,000 in federally funded student debt, but that it should be passed by Congress, saying in a February town hall that “I don’t think I have it. ‘authority”. Nonetheless, a few weeks ago, he ordered the US Department of Education to review its legal authority to write off student loan debt by executive order.
But as higher education expert Mark Kantrowitz put it on CNBC, this could be a way for Biden to pass the blame on to Congress, his preferred option from the start:
“It is only after receiving this report, which I hope will find that it does not have legal authority, that the ball will be in Congress’ court.”
The only problem with the passage through Congress is that there is no indication that the student forgiveness legislation has enough support to pass, as there is no consensus on how much to forgive. even among democrats. With the Senate deadlocked between Republicans and Democrats, Congress looks like a path Democrats are avoiding, at least for now.
So what are President Biden’s plans for canceling student loans?
Monday, the education department announced a regulatory rewrite process, which could change the regulations of existing federal student loan programs, including:
Following President Biden’s recent executive actions that led to qualifications for disability leave, in the same way $ 1 billion in debt relief under the Borrower Defense to Repayment program, it seems likely that the reforms will do more of the same, making it easier for existing borrowers to repay their debt (via reduced payment requirements, which Biden supports) or to repay the loans. While these types of regulatory reforms do not need congressional approval, the process will take a long time, possibly up to a year (the first hearing starts in june).
So, is the global student loan forgiveness dead?
Not enough. If you’ve delayed student loan payments because you’re waiting for forgiveness, you might want to wait a bit longer, at least until the moratorium on student loan payments expires (we’ve already discussed your options. in this Lifehacker post).
Education secretary Miguel Cardona recently suggested that the suspension of the student loan payment would not be extended beyond September 2021, but he did not rule it out either. Sure, you can keep paying off your student debt, but as long as you don’t pay interest, it can’t hurt to take a wait-and-see approach until October.