Biden has authority to cancel student loans for every federal borrower, attorneys general say
President Joe Biden has the legal authority to cancel student loans for every federal student borroweraccording to these attorneys general.
Here’s what you need to know — and what it means for your student loans.
Eight attorneys general — from New York, Hawaii, Illinois, Michigan, Minnesota, New Mexico, Puerto Rico and Washington — are calling on Biden to “cancel federal student loan debt for each borrower”. In their letter to Biden, the attorneys general note:
- the president has the legal authority to enact large-scale student loan forgiveness for every federal borrower under the Higher Education Act of 1964;
- student borrowers are burdened with large student debt and a “systemically flawed repayment and forgiveness system”;
- the student loan repayment pause is not enough to relieve student loans;
- student borrowers will still struggle after the restart of student loan repayments; and
- canceling student loans would be “one of the most impactful racial and economic justice initiatives in recent memory”;
Student Loan Forgiveness: Further Student Loan Relief Needed
Led by Attorney General Letitia James (D-NY), the attorneys general are praising Biden for considering student loan forgiveness of up to $10,000 for student borrowers. (Biden is not canceling most student loan debt). However, they believe that this student loan cancellation plan is insufficient. According to the letter: “Now is not the time for half measures, extensions or disparate solutions. Now is the time for decisive action. We call on your administration to immediately exercise its authority to cancel federal student loan debt for each borrower. While the attorneys general demand immediate action, they don’t specify how much student loan debt Biden should forgive. (Biden also said he would not forgive $50,000 in student loans). Instead, they focus on canceling student loans for every student borrower. This implies that the attorneys general disagree with Biden’s potential limitation on who can receive student loan forgiveness. (Student Loan Forgiveness: Who Might Qualify Under Biden’s Plan). For example, Biden could limit large-scale student loan forgiveness to federal borrowers with student loans only. Biden could also impose an income threshold to further narrow eligible student borrowers. Attorneys general imply that Biden should cancel student loans for all borrowers, including lawyers and doctors. Under this approach, graduate student loans would be included and there would be student loan forgiveness for all borrowers, with no income limit.
Cancellation of the student loan is necessary because the student loan payment break is insufficient
Attorneys general don’t want another break in student loan payments. Rather, they and Biden — who canceled $17 billion in student loans — to enact large-scale student loan cancellation for all federal borrowers. “Resuming federal student loan payments, rather than forgiving them permanently, will only make matters worse,” the attorneys general write. They cite the troubling income-driven repayment program, which forgave student loans to just 50 student borrowers in 20 years. (Student Loan Forgiveness: 5 Key Takeaways from a Major Announcement). They also note their battles with for-profit schools and student loan servicers.
Biden has said he is considering large-scale student loan forgiveness, but he hasn’t made a final decision. If Biden cancels student loans, he will likely limit student loan forgiveness. Currently, the Biden administration is considering an income threshold per borrower of $125,000, though that may change. The student loan payment pause ends August 31, 2022. If your student loans are not forgiven or you are not eligible for possible student loan forgiveness, it is imperative to have a game plan for the student loan repayment. Here are some potential options to save money: