If President Joe Biden decides to decree large-scale student loan cancellation, he could decide before this date.
Here’s what you need to know.
Speculation about large-scale student loan cancellations could apparently be over. After years of back and forth debate over student loan forgiveness, it looks like Biden could be ready to decide the fate of more than 40 million student borrowers. If Biden decides to enact large-scale student loan cancellation, he could decide before August 31, 2022. Here’s why.
Student loan forgiveness: What Biden will decide and when
The news came so fast that you may have missed the announcement. Rather than issue a press release or make an official statement during a daily White House press briefing, White House press secretary Jen Psaki simply answered a question about an episode of the podcast, Pod Save America. Here’s what PSAKI said: “So by August 31, [the student loan pause is] either it’s going to be extended or we’re going to make a decision, like [White House Chief of Staff] Ron [Klain] referenced, on the cancellation of student debt.
What this means for your student loans
What does this mean for student borrowers? First, Biden could announce his fifth extension of student loan relief by August 31. Currently, following Biden’s major announcement earlier this month, federal student loan payments are on hold until August 31. Congress granted historic student loan relief in March 2020 in response to the Covid-19 pandemic, and Biden and President Donald Trump extended student loan relief four times. Second, Biden could decide to cancel student loans through an executive order. Although Biden has resisted large-scale student loan forgiveness, he could change course and deliver unprecedented student loan forgiveness to millions of student borrowers. Third, PSAki confirmed that Biden is actively considering student loan forgiveness as an option for student loan relief. However, PSAki also noted that Biden wants Congress to pass legislation to forgive up to $10,000 in student loans, and he will sign the legislation.
Student loan cancellation: What we don’t know about a Biden announcement
Despite PSAki’s comments, there’s a lot we don’t know for sure about Biden’s potential plans to cancel student loans. (Cancelling a student loan may look different than you expected). For example, we don’t know how many student borrowers would be affected. Biden is unlikely to write off student debt for the 45 million student borrowers. It’s unclear how much student loan debt would be forgiven and what the qualifying criteria would be. Based on PSAki’s response and use of the word “or,” it’s possible Biden could simply extend student loan relief beyond August 31 and not make a decision on large-scale cancellation. student loan scale. If this scenario occurs, it’s unclear whether Biden would cancel student loans in the future or if any failure to cancel student loans by Aug. 31 means he’s decided not to enact a rebate. large-scale student loans. Progressive Democrats in Congress have warned Biden that he must extend student loan relief and cancel student loans now to allow voters to vote for Democrats in November’s midterm elections. Democrats face an uncertain election outlook and could lose control of Congress. Moderate and conservative Democrats in Congress fear large-scale student loan cancellations will alienate independent voters and hurt Democrats, especially in swing states. (Democrats and Republicans are unhappy with Biden on student loan forgiveness).
Student loans: next steps
The good news for student borrowers is that Biden is still considering large-scale student loan forgiveness. The bad news is that there is no guarantee that it will cancel your student loans. Even with possible large-scale student loan cancellation, there are uncertainties that warrant detail and explanation. It’s also conceivable that the Biden administration will delay an announcement on student loan cancellation beyond Aug. 31, which could leave borrowers in student loan limbo. Whatever happens next, now is the time to invest in your financial future. Currently, student loan repayments are due to resume on September 1. Here are some smart ways to pay off student loans faster: