President Joe Biden (Photo by Oliver Contreras-Pool/Getty Images)
Student loan forgiveness could get you student loan forgiveness, but it completely ignores this major problem.
Here’s what you need to know.
Student Loans
Does the president have unilateral authority to enact student loan cancellation by executive order? That’s the legal question that may determine whether you get student loan cancellation. President Joe Biden has asked the U.S. Department of Education to conduct a legal review of the president’s authority to cancel student loan debt. That review could answer this legal question, along with other potential recommendations on how much student loan debt, if any, to cancel, who qualifies, and when student loan cancellation might happen.
It’s somewhat strange that student loan forgiveness has been reduced to a legal question. After all, supporters of student loan cancellation say that student loan forgiveness is a necessary weapon to fight disparity, save young people from a mountain of financial ruin, and pave the way for more Americans to get married, start a family, buy a home and save for retirement. However, Congress apparently can’t pass any legislation on student loan cancellation. So, they’re pressuring the president to cancel student loans. Progressives want Biden to cancel up to $50,000 of student loans, but he has said repeatedly that he thinks $10,000 of student loans is the right amount. Naturally, this debate on wide-scale student loan forgiveness could spark a political firestorm. In his first two months in office, Biden cancelled $2.3 billion of student loans last month, which is within his legal authority and was done on a targeted basis. First, 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.
Student loan cancellation: completely ignores this major problem
However, while student loan cancellation could get you student loan forgiveness, leaders in Washington are completely ignoring a much bigger issue: the cost of higher education. Isn’t the whole debate about student loan cancellation about student loan borrowers being overcharged for their education? Student loan cancellation would grant financial relief to at least a cross-section of the 45 million student loan borrowers. However, one-time student loan forgiveness does nothing to address the growing cost of higher education. Student loan cancellation doesn’t help student loan borrowers tomorrow or the next day. Rather, wide-scale student loan forgiveness helps student loan borrowers who hold student loan debt on the day student loans get cancelled. This doesn’t mean student loans shouldn’t be cancelled. However, if the goal is to lessen the financial burden of parents and students, shouldn’t there be a more thoughtful approach to address the cost of higher education in concert with a consideration of student loan cancellation?
Some will agree that the cost of higher education is too high and deserves comprehensive reform. That said, they also say higher education reform is a much larger, time-consuming issue that would only delay student loan relief that can be provided immediately. You can call student loan cancellation the “take what you can get” approach. However, given the complexity of higher education costs, Congress should deliberate an overall solution to address the cost of higher education. Democrats and Republicans both go to college, so it seems that rethinking how we pay for college in America can find some common ground in Congress.
Should college be free?
“Should college be free” is a question that generates sharp reactions on both sides of the aisle. Like student loan cancellation, America also will react to free college. Some it will say it’s an overdue necessity, while others say a college education is a personal responsibility that shouldn’t be borne by taxpayers. However, the question is a starting point for a larger discussion about the cost of college, who pays for it, and how it’s paid for. Biden has proposed several ways to revise higher education and make college more affordable, including:
- Make college tuition-free at two-year public colleges;
- Make college tuition-free at four-year public colleges
- Student loan forgiveness if you earn less than $125,000 and attended a two-year or four-year public college or university; and
- Student loan forgiveness if you earn less than $125,000 and attended a Historically Black College and University (HBCU) or a Minority-Serving Institutions (MSI).
Republicans are unlikely to support these plans in their current form, and depending on the amount of federal subsidies, state governors may object as well. However, if the goal of student loan cancellation is to provide financial relief, then it seems Congress should be taking a holistic approach to tackle the cost of higher education and have a serious dialogue about a bipartisan path forward.
Student loan cancellation: next steps
It’s possible that the president or Congress cancels student loans — without simultaneously addressing the cost of higher education — because it’s the “easier” thing to do. Millions of student loan borrowers would benefit, although opponents would cite many reasons why student loans shouldn’t get cancelled. For example, nearly 80% of adult Americans either don’t have student loans or didn’t go to college. It’s also possible that Congress attacks the cost of higher education sequentially, rather than simultaneously. For now, America will wait for the results of the legal review from the U.S. Department of Education. The legal review could provide further guidance on student loan cancellation, including the arguments for and against student loan debt cancellation; how much student loan debt, if any, to cancel; who may qualify for student loan cancellation, and alternative ways to provide student loan relief in addition to student loan cancellation. Ultimately, a legal review isn’t binding law. While the review may contain recommendations, Biden will make the final decision after weighing policy and legal considerations. For reference, the Trump administration determined the president does not have existing legal authority to cancel student loans unilaterally. If Biden’s Education Department reaches the same conclusion, then Congress will be tasked with next steps regarding student loan cancellation—a task they have so far largely avoided.
If you’re waiting for student loan cancellation, understand that it’s not guaranteed. So, make sure you understand all your options for student loan repayment. Here are some potential options to consider, all of which have no fees:
