President Joe Biden (Photo by Oliver Contreras-Pool/Getty Images)
What happened to student loan cancellation?
Here’s what you need to know.
Student Loans
It seemed like a foregone conclusion: with the ascension of President Joe Biden, student loan cancellation was finally happening. Yes, there was a debate about the amount of student loan forgiveness — $10,000, $50,000 or some other amount — but the expectation by many was that your student loans would get cancelled. As a presidential candidate, Biden called on Congress to cancel $10,000 of student loans immediately as a result of the Covid-19 pandemic. However, rather than draft a bill to cancel student loans, Congress flipped the table on Biden and started pressuring him to enact student loan cancellation. For example, Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) have been pressuring Biden to cancel up to $50,000 of student loans based on an interpretation of the Higher Education Act of 1965. Biden, it appears, never intended to cancel student loans unilaterally by executive order, nor did he campaign on any such promise. Biden, a lawyer and former U.S. senator, understood that only Congress (not the president) has the power to enact wide-scale student loan cancellation. That said, Biden, in good faith, agreed to ask the U.S. Department of Education to conduct a legal review of his authority as president to cancel student loans unilaterally without further congressional authorization.
But then this happened.
What happened to the legal review of student loan forgiveness?
In March, White House Chief of Staff Ron Klain confirmed that the Education Department was reviewing Biden’s ability as president to enact student loan cancellation by executive order. At the time, Klain said the legal review would be completed within weeks. “He’ll look at that legal authority,” Klain said, referring to Biden. “He’ll look at the policy issues around that, and he’ll make a decision.” The review likely would include the following:
However, nearly three months later, the legal review hasn’t materialized and there has been no announcement regarding wide-scale student loan cancellation.
Student loan cancellation dropped from infrastructure package and budget
Since the announcement that there would be a legal review, there have been several developments regarding student loan forgiveness. However, none of them have been positive indications that any student loan forgiveness is forthcoming. For example:
Taken together, these actions (or inactions) suggest that Biden won’t enact student loan cancellation.
Student loan cancellation: next steps
There is still some hope that your student loans will get cancelled. While the legal memo has not been finalized, there’s still a chance the Education Department finds a legal avenue for the president to enact wide-scale student loan cancellation. Legally, it’s an uphill battle for the president to cancel student loans, but never say never. The Trump administration found that a president cannot unilaterally cancel student loans without further congressional approval, but the Biden administration may reach a different conclusion. Even if there isn’t wide-scale student loan forgiveness, Biden is likely to cancel student loans in a targeted way. For example, he has already cancelled at least $2.3 billion of student loans. Biden cancelled $1 billion of student loans for 72,000 student loan borrowers and second, he cancelled another $1.3 billion of student loans for 41,000 borrowers with total and permanent disability. So, at a minimum, expect there to be student loan cancellation, but it may not be the type of student loan cancellation where all student loan debt gets cancelled or everyone gets their student loans cancelled.
If you have student loans, now is the perfect time to review your options. Student loan payments are expected to restart October 1, 2021, so make sure you’re prepared for student loan repayment. Here are some good places to start:
