Senate Majority Leader Chuck Schumer (Photo by Drew Angerer/Getty Images)
Senators Chuck Schumer and Elizabeth Warren renewed their call yesterday for President Joe Biden to cancel $50,000 of student loans, but this was the biggest takeaway on student loans.
Here’s what you need to know.
Student Loans
Whether you support or oppose wide-scale student loan cancellation, there’s no denying that Senate Majority Leader Schumer (D-NY) and Sen. Warren (D-MA) have campaigned tirelessly to pressure Biden to enact student loan forgiveness. Yesterday, the two senators, with Rep. Ayanna Pressley (D-MA), held another press conference to advocate for student loan cancellation. The press conference was no different than the many other events on student loan cancellation: the need to cancel student loans, why it’s needed, and how Biden can cancel student loans with a “flick of a pen.” However, the biggest takeaways on student loan cancellation cafeconomme directly from Schumer and Warren during the Q&A. Here’s what you may have missed on student loan cancellation:
Student loan cancellation: the most current conversations with Biden
Schumer provided an update on student loan cancellation, particularly regarding conversations with The White House:
Schumer confirmed student loan cancellation is still being discussed with The White House
This may sound obvious, but it’s not a given that Schumer and Warren are still speaking regularly with The White House on student loan cancellation. Both sides are well aware of the arguments regarding student loan forgiveness. However, Schumer confirmed that to be the case.
Schumer says The White House is understanding how important student loan cancellation is for student loan borrowers, the economy and all Americans.
“I believe that they are understanding every week how important this is for the economy, for the people of America,” Schumer said. (These researchers say that wide-scale student loan cancellation won’t stimulate the economy compared to stimulus checks and unemployment insurance).
Student loan cancellation: any progress?
According to Schumer, there has been progress made during conversations with the Biden administration. Specifically, Schumer says that The White House no longer makes some of the arguments against student loan cancellation that they used to make.
“Yes, I think we’ve made progress,” Schumer said. “In fact, some of the arguments that they used to make, they no longer make. One is it will get taxed. We took care of that in the [American Rescue Plan] bill. Another is that they don’t have the legal authority. We don’t hear much of that anymore because we think they do. So, we are making progress.”
Warren and Sen. Bob Menendez (D-NJ) proposed legislation, which became law through the Americans Rescue Plan, to make student loan cancellation tax-free for student loan bororwers through December 31, 2025.
Student loan cancellation: what’s different right now?
Yesterday’s event wasn’t much different than previous press conferences on student loan cancellation, except now Schumer and Warren are connecting the expiring student loan payment moratorium with wide-scale student loan cancellation. Beginning October 1, 2021, federal student loan payments are slated to resume, which means student loan borrowers should expect to make student loan payments in two months. Biden may extend the student loan relief beyond September 30, 2021, even if unemployment benefits and the eviction moratorium end. However, there is no guarantee. Schumer says that the very same reasons to extend the moratorium are the same reasons to cancel student loan debt. This includes necessary financial relief for millions of Americans due to the Covid-19 pandemic, among other concerns. Warren also said that student loan servicers aren’t prepared for student loan borrowers to make student loan payments again. “What’s different right now is that we are two months away from payments restarting for 30 million Americans,” Warren said. “That’s a real on-the-ground impact for families that are struggling. The president can avoid that, and that’s important both family by family, but also for our economy.”
Student loan cancellation and extending temporary student loan forbearance derive from the same power
Interestingly, Schumer and Warren now say that student loan cancellation and the temporary student loan forbearance derive from the “same power.” Presumably, they are referring to Biden’s executive authority. However, the original temporary student loan forbearance was from congressional legislation (through the Cares Act stimulus package), not the president. “So, we are staring down a deadline not of our making, but the president’s making,” Warren said. Congress created the federal payment pause with an expiration of September 30, 2020. President Donald Trump extended the student loan payment pause twice through executive action: first through December 31, 2020 and then through January 31, 2021. Biden extended the payment pause for eight months through September 30, 2021. In aggregate, the U.S. Department of Education estimates that student loan borrowers will have received more than $90 billion of student loan relief as a result. While Biden has executive authority to extend the payment pause beyond September 30, there has been no announcement regarding any such extension. It’s also not legally settled whether the president can act unilaterally to enact student loan cancellation without further congressional authorization. Schumer and Warren disagree, and say that Congress already authorized the president to enact wide-scale student loan cancellation without limit through the Higher Education Act of 1965.
“And we’re asking that the payment pause be extended, but more critically, we are asking that he go ahead and cancel student loan debt,” Warren said. “Remember, he has the power to extend the payment pause. We know that because he’s done it. And that same power is his to cancel student loan debt.”
“If he can do one, he can do the other,” Schumer said.
There’s no guarantee that Biden will extend the pause on student loan payments or enact wide-scale student loan cancellation. The president could pursue all, some or none of these policies. Regardless of what transpires, make sure you have a clear strategy for student loan repayment. You don’t want to hope for student loan relief and then find out it doesn’t happen or you don’t qualify. Here are some popular options for student loans that can help you save money:
