Student loans

4 reasons why your student loans may not be forgiven

Here are 4 reasons why your student loans can do not get cancelled.

Here’s what you need to know — and what that means for your student loans.

Student loans

There is unprecedented enthusiasm among student borrowers. Why? President Joe Biden is actively considering large-scale student loan forgiveness. While Biden has said he won’t forgive $50,000 in student loans, he might consider a smaller amount, like $10,000 in student loan forgiveness. However, before you start celebrating, it is essential that you understand that you may not get your student loan forgiven. Here are 4 reasons why you can’t get your student loan forgiven:

1. Biden won’t embrace large-scale student loan cancellation

Yes, Biden is considering student loan forgiveness for millions of student borrowers. To date, Biden has canceled $17 billion in student loans. However, there is no guarantee that Biden will embrace large-scale student loan forgiveness. “I’m looking at facing debt reduction,” Biden said last week. “I’m not looking at a $50,000 debt reduction. But I am carefully considering whether or not there will be additional debt forgiveness. As Biden explained, he hasn’t made the final decision to cancel student loans. Instead, it goes through a “process” and specifically notes “whether or not there will be additional student loan forgiveness.” If Biden decides to do a large-scale student loan forgiveness, he could cancel student loans by that date.


2. You don’t qualify for student loan forgiveness

If Biden enacts large-scale student loan forgiveness, that doesn’t mean you will qualify. If there are qualifications, “large-scale student loan forgiveness” may not be as “large-scale” as you think. For example, Biden will likely limit student loan forgiveness in several ways. (Student Loan Forgiveness: Who Might Qualify Under Biden’s Plan). First, Biden will likely limit student loan forgiveness to only federal student loans. This limitation is consistent with legislation proposed by Sen. Elizabeth Warren (D-MA) and Sen. Chuck Schumer (D-NY), which would limit student loan relief to only federal student loans. Second, Biden could limit student loan forgiveness to student loans only. Graduate student loans account for nearly half of the $1.7 trillion in student loans outstanding. However, higher education, especially law and medical school, leads to higher income on average. By limiting student loan forgiveness to student loans, Biden could play down criticism that large-scale student loan relief disproportionately benefits high-income earners. (Biden Confirms He Won’t Forgive $50,000 in Student Loans – 5 Key Takeaways)


3. Your income is too high to get student loan forgiveness

Your income may be too high to get student loan forgiveness. Like the potential limitations for federal student loans and college student loans only, Biden may seek additional constraints on who is eligible for student loan relief. For example, Biden could also limit the cancellation of student loans by imposing an income threshold. (No, Biden is not canceling most student loan debt). While Warren and Schumer have proposed an annual income threshold of $125,000, Biden could choose a different amount. For reference, $75,000 in annual income was the threshold for stimulus checks in response to the Covid-19 pandemic. That said, there is also a movement to limit student loan forgiveness to low-income borrowers only. While the Biden administration is expected to define “low income,” the goal would be to target maximum student loan relief to student borrowers who are experiencing the most difficulty.


4. Biden lacks legal authority for large-scale student loan cancellation

Even if Biden proceeds with student loan cancellation, that does not mean he has the legal authority to enact large-scale student loan cancellation. (A new proposal would prevent Biden from canceling student loans). Members of Congress may have their own view of a president’s power to act unilaterally through executive action. For example, Warren says the Higher Education Act of 1964 authorizes the president to forgive an unlimited number of student loans for an unlimited number of student borrowers. In contrast, House Speaker Nancy Pelosi (D-CA) says the president has no such power and that only Congress can enact large-scale student loan forgiveness. However, if there is a legal challenge to a potential executive action, only a court will make the final decision on its legality. Therefore, Biden could seek to enact large-scale student loan forgiveness, but implementation could be delayed or prevented.

You may be eligible for student loan forgiveness. However, there’s no guarantee if the president will forgive more student loans, how many would be forgiven, and whether you’ll qualify. Any student loan cancellation is likely to include limitations, which will limit the number of eligible borrowers. As the end of temporary student loan relief approaches, it is essential to review all of your student loan repayment options. Here are some popular ways to pay off student loans and save money:

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No, Biden is not canceling most student loan debt