President Joe Biden has now canceled more than $17 billion in student loans.
Here’s what you need to know – and what it means for your student loans.
Biden has canceled more student loans than any other president. Here’s a breakdown of historical student loan easements:
- $6.8 billion for 113,000 borrowers through government loan forgiveness;
- $7.8 billion for more than 400,000 student loan borrowers who have complete and permanent disabilities;
- $2 billion for 105,000 student loan borrowers who were enticed into student loan repayments by their college or university through borrower defense; and
- $1.2 billion for student borrowers attending ITT Technical Institutes.
(Student Loan Forgiveness: 5 Key Takeaways From The Big Announcement)
Student Loan Forgiveness: $200 billion in student loan relief for borrowers
Student loan borrowers have received about $200 billion in student loan relief over the past two years due to the Covid-19 pandemic. In March 2020, Congress passed the Cares Act, a $2 trillion stimulus package that included historic student loan relief. Among other benefits, student loan borrowers no longer had to make federal student loan payments. Student loan interest rates were temporarily set to 0% with no new interest accruing. President Donald Trump extended that student loan easement twice, and then Biden approved four more extensions. Overall, 37 million student loan borrowers have not had to make a federal student loan payment since March 2020. This includes the entire duration of Biden’s presidency. In addition to the non-required federal student loan payments, student loan borrowers may count any non-payments against student loan forgiveness requirements. Examples include student loan forgiveness through income-tested repayment and government loan forgiveness. This student loan facility expires on August 31, 2022. For a borrower seeking government loan forgiveness — which requires 120 monthly student loan payments — that borrower has received almost 30 months, or 25%, of a credit for the requirements to begin college loan forgiveness.
Student loan relief hasn’t made everyone happy
When it comes to student loan relief, not everyone is happy. For some student-loan forgiveness advocates, Biden’s actions show a strong commitment to reforming a broken higher education system. For other supporters, on the other hand, there have been too few Bafög terminations. (If Biden cancels more student loan debt, it could happen before that date). For example, there are 45 million student loan borrowers who collectively owe $1.7 trillion. While $17 billion is a significant amount for student loan cancellations, some proponents argue that it accounts for only about 1% of outstanding student loan debt. Progressive Democrats in Congress are pushing for student loan forgiveness of up to $50,000, while others are calling for student loans to be eliminated altogether. Republicans are equally unhappy with Biden’s student loan ban, albeit for different reasons. While Biden has focused on targeted student loan cancellations, Congressional Republicans oppose large-scale student loan cancellations. They argue that any attempt to enact a large-scale student loan ban without additional approval from Congress would exceed the president’s legal authority. Republicans also believe that the mass cancellation of student loans amounts to a wealth redistribution that hurts Americans who don’t have student loans or who never went to college.
Student loan payments are scheduled to resume from September 1, 2022. While the President could extend student loan easing for a fifth time, borrowers should prepare as if it’s not going to happen. You should now review all your options and choose the best student loan repayment strategy. Here are some popular options for paying off student loans: