President Joe Biden (Photo by Leigh Vogel/Getty Images for Concordia Summit)
Student loan forgiveness will be excluded from $1.85 trillion spending package.
Here’s what you need to know.
Student Loans
This week, the U.S. House of Representatives is expected to debate the $1.85 trillion major spending package, which is part of President Joe Biden’s Build Back Better Plan. Inside this major legislation, you’ll find spending on health care, education and climate change. However, absolutely nowhere inside this legislation will you find any mention of student loan forgiveness or student loan cancellation. This is despite student loan forgiveness apparently being a top priority for Democrats in Congress. Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA), who both have called for up to $50,000 of student loan forgiveness for student loan borrowers, have championed universal student loan cancellation as a centerpiece of their policy goals. Biden too supports $10,000 of student loan forgiveness for borrowers and has encouraged Congress to pass legislation. (Here’s how to get student loan forgiveness).
Why Democrats excluded student loan forgiveness
If you’re a student loan borrower who is hoping for student loan forgiveness, you’re probably frustrated why Democrats have repeatedly excluded student loan cancellation from major legislation. (Here are 3 ways to get a lower student loan payment). Democrats haven’t included student loan forgiveness in stimulus packages, the infrastructure package and other major legislation. Student loan forgiveness also didn’t appear in the president’s annual budget. Many progressives — from Schumer and Warren to Rep. Alexandria Ocasio-Cortez (D-NY) and Rep. Ayanna Pressley (D-MA) — are strong supporters of wide-scale student loan cancellation. They have repeatedly called on the president and fellow members of Congress to enact mass student loan cancellation. (Here’s how to apply for limited student loan forgiveness). However, mass student loan forgiveness has been excluded from legislation each time. This month, Schumer admitted that Congress won’t cancel student loans. Schumer blames partisanship in Congress, namely that Republicans won’t support wide-scale student loan forgiveness. However, while Republicans don’t support mass student loan forgiveness, many Democrats don’t support student loan cancellation either. (Student loan forgiveness has one major problem). Like Republicans, some Democrats are concerned about the cost. Schumer and Warren’s plan to cancel up to $50,000 of student loans for borrowers could cost $1 trillion. Even Biden’s plan to cancel up to $10,000 of student loans could cost $377 billion. (You can still get student loan forgiveness even if you don’t work in public service).
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What this means for your student loans
If Democrats exclude student loan forgiveness from the $1.85 trillion spending bill, then it’s another clear sign that Congress won’t cancel student loans. (Here’s what’s next for student loan cancellation). Yes, partisanship is a major roadblock to more student loan relief. Given the slim majorities in the House and Senate, Democrats have to be mindful of which legislation they choose to advance to ensure its passage. However, given this reality and other Democrats’ aversion to mass student loan forgiveness, student loan borrowers shouldn’t expect wide-scale student loan cancellation. (That said, the Education Department announced $2 billion of student loans will be cancelled within weeks). This may turn attention to Biden, who progressives want to cancel student loan debt for borrowers. However, Biden doesn’t believe he has legal authority to cancel student loan debt without additional congressional authority. Some point to the existence of a legal memo from the U.S. Department of Education regarding the president’s legal authority. They say this legal memo may empower Biden to cancel student loans. However, that legal memo, which is heavily redacted, means nothing for student loan cancellation. It’s a non-binding memo, and Biden can make the final decision whether he proceeds to enact student loan cancellation through an executive order. Biden has decided instead to focus on targeted student loan cancellation. Biden has cancelled $11.5 billion of student loans, the most of any president. Biden will continue to cancel student loans for student loan borrowers, including public servants, disabled borrowers and borrowers who were misled by their college or university, among others. Based on Biden’s actions, expect more targeted student loan cancellation, but don’t expect mass student loan cancellation any time soon.
Since Democrats won’t include student loan forgiveness in this major spending package, the prospects for wide-scale student loan cancellation are dim. Make sure you explore all options for student loan repayment. Here are some popular options to pay off student loans faster:
