If Biden Cancels Student Loans, He Will Consider These 7 Things

Here’s what President Joe Biden will consider when deciding to cancel student loans.

Here’s what you need to know.

Student Loans

Direct pressure is on Biden to provide blanket student loan termination for more than 40 million student loan borrowers. Progressive members of Congress and student loan advocates want the president to use an executive order to give federal student loan borrowers a one-time waiver of up to $ 50,000. To date, Biden has not endorsed the cancellation of student loans of $ 50,000 or the widespread granting of student loans by ordinance. However, Biden has urged Congress to pass a law that would cancel student loans of up to $ 10,000. (Here are 5 key changes for student loans in 2022).

If Biden decides to take large-scale student loan waivers, he will likely evaluate at least 7 things to make a final decision:

  1. Total cost of canceling the student loan
  2. State of the US economy
  3. State of the Covid-19 pandemic
  4. Impact on Student Loan Borrowers When a Student Loan Is Not Made
  5. Termination of the student loan until today
  6. Other ways to facilitate student loans
  7. Effects on the midterm elections

1. Total cost of canceling the student loan

When considering a possible large-scale cancellation of the student loan, the cost of Biden administration will be paramount. There are several student loan termination suggestions for student loan borrowers. The total cost will depend on several factors including the number of student loan borrowers, the amount of student loan debt, and any restrictions that may apply. In any of these scenarios, large-scale student loan cancellation could cost hundreds of billions of dollars and potentially a trillion dollars. (Student loans are exposed, but here are 6 things to do right now)

All student loan cancellation: $ 1.5 trillion cost

Senator Bernie Sanders (I-VT) has proposed that all private and federal student loan debt be scrapped. If Biden were to cut all federal student loan debt – which is highly unlikely – the total cost would be about $ 1.5 trillion.

$ 50,000 Student Loan Cancellation: $ 1.0 trillion in cost

Senate Majority Leader Chuck Schumer (D-NY) and Senator Elizabeth Warren (D-MA) have proposed canceling up to $ 50,000 in student loans for federal student loans that earn up to $ 125,000 annually. (Here’s who’s just qualifying for student loan remission). The US Department of Education estimates that this would completely cut student loans for 36 million borrowers. If Biden were to implement this also highly unlikely proposal, the total cost could be about $ 1 trillion.

$ 10,000 Student Loan Cancellation: $ 400 Billion Cost

Biden’s plan to cut student loans of up to $ 10,000 could cost about $ 400 billion.

Alternatively, if Biden were to waive student loan cancellation, he could choose a different student loan cancellation amount and limit the number of qualifying student loan borrowers.


2. Student Loan Remission: State of the US Economy

Biden will assess the health of the U.S. economy before making a decision on whether or not to grant student loans to a large extent. The Biden government has been arguing for months that the economy is recovering. However, Biden’s “Build Back Better” legislative agenda has stalled in Congress, but it is an important component in stimulating economic growth. If Biden issues a blanket cancellation of the student loan, it could be seen as contradicting its economic message. On the one hand, the student loan termination would be granted to help student loan borrowers who are in financial difficulty. On the flip side, the economy is reportedly recovering, which would suggest that more student loan relief would not be warranted. (Further relief for student loans could come).


3. Student loan waiver: status of the Covid-19 pandemic

Biden will also consider the progression of the Covid-19 pandemic, including the impact of the Covid-19 pandemic, before executing a student loan cancellation. The Covid-19 pandemic is affecting student loan borrowers in several ways, including health and economic perspectives. With the daily Covid-19 cases exceeding 1 million, Biden would look to see if the cases have peaked and if Covid-19 will continue to affect the ability of student loan borrowers to repay their student loans.


4. Impact on student loan borrowers when there is no student loan forgiveness

Is student debt relief next? Maybe, but Biden will also consider what happens when there is no widespread student loan forgiveness. Some say there will be significant defaults on student loans. For example, citing a recent study, Warren warned that 89% of student loan borrowers are financially unprepared to resume student loan payments. (Biden extended student loan relief, but proponents really want student loan cancellation). Warren also said that if the student loan debt is not canceled, millions of student loan borrowers could default on their student loans. In his announcement to extend the student loan facility for the third time, Biden encouraged student loan borrowers to do these 3 things. These strategies suggest that the President is encouraging student loan borrowers to prepare for resumption of student loan payments and to pursue student loan repayment strategies beyond the student loan termination. (Student loans are on hold, but here are 6 things to do now).


5. Previous termination of the student loan

While Progressives have criticized Biden for failing to extensively cancel student loans, Biden has canceled more student loans than any president in US history. (Here’s how to get student loan waiver while under Biden administration). Since taking office last year, Biden has canceled $ 12.7 billion in student loans. This includes the termination of student loans for civil servants, student loan borrowers with complete and permanent disability, and student loan borrowers who have been misled by their college or university as part of the borrower’s objection to the repayment rule. (Student loan borrowers will now receive a $ 15 billion student loan cancellation). While Biden has focused on targeted student loan cancellation, he will weigh this approach when considering large-scale student loan cancellation. While Progressives will argue that there is no limit to the amount of student loan cancellation Biden can implement, Biden will likely offset the amount of previous federal spending with previous and ongoing student loan cancellations.


6. Other ways to facilitate student loans

Instead of a comprehensive cancellation of the student loan, Biden could consider other avenues to get student loan relief. First, though less likely, Biden could extend student loan relief beyond May 1, 2022. Second, Biden could encourage more student loan borrowers who are struggling financially to sign up for an income-oriented repayment plan. Third, Biden may provide more resources through the Department of Education that can help student loan borrowers transition to repaying federal student loans. Fourth, Biden could introduce a grace period for student loan borrowers when student loan payments are resumed, with particular reference to student loan borrowers who have defaulted or are in default.


7. Student loan waiver: implications for mid-term elections

Biden will also consider the impact of the student loan waiver on the November 2022 mid-term elections. Biden has been in politics for nearly 50 years and knows the elections and the political landscape well. Progressives in Congress say student loan waivers are essential if Democrats are to win the midterm elections. They argue that unless they cancel up to $ 50,000 in student loans, the Democrats will lose the midterm elections. Others say student loan granting could be the reason the Democrats lose the midterm elections. While popular with student loan borrowers and progressives in Congress, large-scale student loan cancellation is not universally popular with the US electorate or in Congress. Progressives advocate large-scale student loan cancellation, but some moderate and independent voters – especially in swing districts – may view large-scale student loan cancellation as a form of wealth redistribution and a lack of personal responsibility. Whether you approve or disapprove of widespread student loan waivers, Biden is sure to consider the policy implications.

Student loan forgiveness won’t last forever. Cancellation of the student loan is not guaranteed. Therefore, find out about the options for repaying the student loan. Here are some popular ways to pay off student loans:


Student Loans: Related Literature

Is student debt relief next?

Student loan borrowers will receive a $ 15 billion student loan cancellation

Student loans will change in five main ways in 2022

Biden extended the student loan facility, but proponents really want the student loan cancellation

.

Leave a Comment

Your email address will not be published. Required fields are marked *