Biden could cancel student loans this Saturday
President Joe Biden (Photo by OLIVER BUNIC/AFP via Getty Images)
AFP via Getty Images
President Biden could announce a plan to cancel student loans this Saturday.
Here’s what you need to know — and what it means for your student loans.
Student loans
After months of waiting for a possible student loan cancellation, Biden could finally make a major announcement that will impact millions of student borrowers. Here are 3 reasons why Biden could make an announcement this Saturday to forgive student loan debt.
Student Loan Forgiveness: Here’s Why It Could Happen Saturday
There are at least three reasons why Biden could cancel student loans for millions of student borrowers this Saturday.
- First, Biden delivers the commencement address at the University of Delaware on Saturday. A college graduation ceremony could be an ideal platform for Biden to announce a large-scale student loan cancellation.
- Second, Delaware is Biden’s home state and he graduated from the University of Delaware. The familiar ground offers the advantage of home court to announce a major education policy decision.
- Third, on April 28, 2022, Biden said he would announce a decision on whether to enact large-scale student loan forgiveness within weeks. As it was four weeks ago today, Saturday would roughly line up with that timeline.
- Bonus: Temporary student loan relief expires August 31, 2022. If Biden announces large-scale student loan cancellation now, that would give the US Department of Education three months to implement student loan cancellation. before the restart of student loan repayments.
Student loan cancellation: How much student loan debt Biden could cancel
How much student loan could Biden cancel? Biden made two key statements about large-scale student loan forgiveness that could serve as the basis for any student loan relief. First, Biden said he wanted to forgive up to $10,000 in student loan debt for student borrowers. Since the 2020 presidential election, Biden has called on Congress to pass legislation to cancel student debt. Since Congress hasn’t acted, Biden could proceed to cancel the student loan by that amount. Second, Biden said he wasn’t considering up to $50,000 in student loan forgiveness. It’s a major disappointment for progressive Democrats in Congress, such as Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY), who both championed a $50,000 rebate student loan. If Biden cancels student loans, the most likely amount is $10,000, although the president could select a higher amount that remains below $50,000.
Will everyone have their student loan forgiven?
Will everyone have their student loan forgiven? No. If Biden announces large-scale student loan forgiveness, many student borrowers may be disappointed as they may not be eligible for student loan forgiveness. Although Biden did not announce the requirements for large-scale student loan forgiveness, the Biden administration did refer to a potential maximum income threshold of $125,000 in annual income. This is the same income threshold that Warren and Schumer included in their legislative proposal for student loan forgiveness. However, this amount is $50,000 upper above the income threshold to get a Covid-19 stimulus check. Republicans have criticized the large-scale student loan forgiveness as a redistribution of wealth that disproportionately benefits the wealthiest Americans. Biden could also limit student loan forgiveness to only federal borrowers. Finally, Biden could target student loan relief to financially distressed student borrowers, which could suggest a lower income requirement. (Student loan cancellation could mean the end of student loan relief).
Student loan forgiveness could be delayed
There is no guarantee that Biden will announce a large-scale student loan cancellation on Saturday. Why? Here are several reasons. First, Biden could decide not to enact large-scale student loan forgiveness. Biden has forgiven more than $17 billion in student loans since becoming president. He may prefer to pursue targeted student loan cancellation. Alternatively, it can focus on improving current student loan forgiveness programs and student loan repayment options. Second, Biden could not have had the legal authority to enact a large-scale student loan forgiveness. After careful legal review, Biden may decide that even if he proceeds with student loan forgiveness, the U.S. Supreme Court could block any attempt to forgive student loans for all or most student borrowers by the through an executive order. Third, Biden could postpone an announcement on canceling student loans until a later date. The midterm election is Nov. 8 and temporary student loan relief ends Aug. 31. Biden could wait closer to either of those dates. If Biden proceeds with student loan forgiveness, he cannot extend temporary student loan relief. In this scenario, make sure you are prepared for student loan repayments to resume starting September 1, 2022. Here are some popular ways to prepare and repay student loans faster: