Don’t expect your student loan forgiveness
Don’t expect a student loan discount for all student loan borrower.
Here’s what you need to know – and what it means for your student loans.
Yesterday at a virtual student debt summit, Senate Majority Leader Chuck Schumer (D-NY) slammed President Joe Biden for failing to enact large-scale student loan cancellation . Schumer reiterated his call for Biden to write off up to $ 50,000 in student loan debt for borrowers “with the stroke of a pen,” referring to what Schumer believes is Biden’s legal authority to enact a massive cancellation of student loans by decree. Schumer says canceling student loans will boost the economy and help a generation of student loan borrowers have extra money to get married, raise a family, buy a home, save for retirement and start a business . However, here’s the thing: As long as student loan cancellation is on the way, the reality is that not every student loan borrower will get their student loan canceled. Let’s break it down:
1. Every student loan borrower will not get their student loan canceled
The student loan cancellation has been vaguely talked about in a binary way: either Biden cancels the student loan debt or no one gets the student loan cancellation. Since becoming president, Biden has canceled nearly $ 10 billion in student loans. (Find out how to apply for a nearly $ 10 billion student loan forgiveness). This includes student loan forgiveness for disabled student loan borrowers as well as student loan cancellation for student loan borrowers under the borrower’s defense against repayment rule. (Find out how to request this student loan cancellation). Despite the high headline count, some say that, on a relative basis, a targeted student loan forgiveness is welcome, but the student loan forgiveness to date is only less than 1% of total student debt. $ 7 trillion. Student loan cancellation may help more student loan borrowers, but that doesn’t mean Biden will write off everyone’s student loan debt. Biden has actively chosen to cancel student loans on a targeted basis under current federal law. In contrast, Biden disagrees that he has the one-sided power to write off everyone’s student loan debt. (Here are 5 reasons why Biden didn’t cancel student loans). While Biden asked the US Department of Education in March for a ruling on his legal authority, this legal memorandum has not been made public. Biden will continue to write off student loan debt, but most student loan borrowers will not have all of their student loan debt paid.
2. The cancellation of the student loan: “Students do not need their debts to be suspended, they need them to be canceled”
Schumer said that “students don’t need their debt to be suspended, they need it to be written off.” Schumer is referring to the temporary forbearance of student loans, which as the then Senate Minority Leader he helped push through the Cares Act stimulus package through Congress in March 2020. Although Biden did not enact large-scale student loan cancellation, Biden extended the Patience Temporary Student Loan twice. (Student loans were canceled thanks to these heroes). According to the US Department of Education, this resulted in an overall savings of $ 5 billion per month for student loan borrowers. Based on those two expansions, that means Biden will have canceled an additional $ 60 billion in student loans by Jan.31, 2022, when this student loan relief ends. Combined with Congressional student loan relief and two extensions from President Donald Trump, student loan borrowers will have received more than $ 110 billion in student loan cancellations until early next year. (Here’s how to get a student loan discount). As an added benefit to student loan borrowers, for the purposes of income-based repayment plans and public service loan forgiveness, student loan debt defaults within 22 months of the Covid-19 pandemic will be counted as payments to calculate loan forgiveness under these programs. In fairness to Biden, a bipartisan Senate passed the Cares Act, which provided substantial student loan relief to student loan borrowers. Although Biden was not a senator at the time, Schumer was and could have tried to negotiate the outright cancellation of the student loan in the Cares Act if he thought the cancellation of the student loan was greater than the break. student loan payment. In fairness to Schumer, however, as a member of the Senate Minority Party, the Republican-led Senate would not have passed his proposal to write off up to $ 50,000 in student loans. Today, Schumer is the most powerful member of the Democratic-controlled Senate and could bring a vote in the Senate on the large-scale cancellation of student loans. To date, however, this has not happened. Congress didn’t even vote on canceling student loans, although Biden called on Congress to pass legislation to cancel up to $ 10,000 in student loans. Of course, if Congress had the vote, Congress could cancel up to $ 50,000 or whatever. (Here is the Democrats’ position on canceling student loans).
3. Cancellation of a student loan up to $ 50,000 may not include you
Schumer and Senator Elizabeth Warren (D-MA) are the architects of the plan to write off up to $ 50,000 in student loan debt for student loan borrowers. As a presidential candidate, Warren advocated for the cancellation of student debt for up to 95% of all student loan borrowers. Under the Schumer-Warren Plan, 36 million student loan borrowers would see federal student loan debt written off completely. That said, this plan is sometimes loosely described as canceling everyone’s student debt. Warren and Schumer are leading advocates for the large-scale student loan cancellation, but their plan has also will not cancel the student debt of every student loan borrower. First, their plan does not apply to private student loans, so if you have private student loan debt, those student loans will not be eligible for student loan cancellation. Second, there is an income limit. If you earn more than $ 125,000 per year, you will not be eligible for the cancellation of your student loan under their plan. You may find this fair or unfair, but it is important to understand the proposal, who would qualify and who would be excluded. (If you don’t get your student loan waiver, do these 3 things).
4. Student loan waiver: the message is important for student loan borrowers
Don’t expect your student loans to be canceled. This is the message student loan borrowers may not want to hear, but should hear. This is not a comment on the strength, or lack thereof, of the underlying student loan cancellation policy. Rather, it is the reality of the current political landscape and legislative agenda. Again, you may find this fair or unfair, but this is the most likely outcome. The Biden administration has made it clear that student loan relief for the Covid-19 pandemic will end, without further extension, on January 31, 2022. If you are counting on an extension of student loan relief, please do not do it. If you believe that all of your student loan debt will be canceled by this date through a large-scale student loan cancellation, please do not do it. The US Department of Education is reaching out to student loan borrowers to notify them of the resumption of federal student loan payments effective February 1, 2022. While there is always the possibility of a surprise in January, nothing has happened. makes it clear that Biden or Congress will adopt a broad-scale student loan cancellation at all times.
It is important to pass this message on so that you can prepare now for the repayment of your student loan. If you qualify for your student loan waiver, apply. If you don’t, make sure you understand your alternative options. Here are some popular ways to save money: