Student Loan Forgiveness: Biden Framework Could Look Like This – Forbes | Vette Leader

President Joe Biden’s framework for forgiving student loans might look like this.

Here’s what you need to know – and what it means for your student loans.

student loans

Biden is weeks away from announcing three major decisions on student loans and student loan forgiveness. The most important decision of the three — sweeping student loan cancellations — could affect millions of student loan borrowers. Will Biden Call $10,000 in Student Loans? Will Biden Cancel $50,000 in Student Loans? Will Biden Forego Student Loan Forgiveness? Here’s a potential framework Biden could use to determine if he will call in student loans.

1. Whether to cancel student loans

First, Biden must decide whether to call in student loans. It’s not a foregone conclusion that Biden will enact a large-scale foreclosure on student loans. Biden has forfeited more than $30 billion in student loans since taking office. For example, Biden canceled $8.1 billion in student loans for state employees. He also agreed to foreclose $6 billion in student loans for 200,000 student borrowers. Now he has to weigh the pros and cons of broad student loan relief. Proponents say sweeping student-loan forgiveness will boost the economy, reduce inequality, and give borrowers the financial freedom to get married, start a family, buy a home, save for retirement, or start a business. Opponents say Biden has already canceled $400 billion in student loans and his plan represents a wealth redistribution that will hurt working Americans who didn’t go to college.

2. How much cancellation of student loan

Second, Biden must determine how much student loan debt to cancel. The most likely scenario is that Biden will cancel $10,000 in student loans for each eligible student loanee. However, the White House has denied that Biden decided to cancel $10,000 in student loans. However, since running for president in 2020, Biden has referenced $10,000 in student loan forgiveness. Progressive Democrats in Congress are still lobbying for the President to cancel $50,000 in student loans, and the President could elect to cancel any amount of student loans.

3. Who qualifies for student loan forgiveness?

Third, Biden must decide who qualifies for student loan forgiveness. For example, there are clear requirements for forgiving public sector loans and holding off borrowers until repayment. However, there is no precedent for sweeping student loan forgiveness — even with these 5 Big Student Loan Changes. If Biden goes ahead with broad student loan cancellations, he needs to set the rules for qualification. The Biden administration has set potential annual income caps of $125,000 or $150,000 for individuals, which would limit who is eligible for student loan forgiveness. Some proponents say there should be no income caps and all student loan borrowers should qualify. Opponents have argued that if there are income caps, they should be aimed at low-income student loan borrowers.

4. Power of attorney to terminate the student loan

Fourth, Biden needs to address whether he has the legal authority to issue a large-scale foreclosure on student loans. Biden has said he doesn’t believe he has the existing legal authority to call in student loans for most or all student loan borrowers. Rather, as House Speaker Nancy Pelosi said, only Congress can forgive student loan debt unless Congress proactively grants the president additional executive powers. Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) argue that the President has an existing power to eliminate student loans, which was granted by Congress in the Higher Education Act of 1965. Biden may decide to terminate student loans but could face lawsuits that could block any implementation of student loan easements. Ultimately, the US Supreme Court could rule on the parameters of the President’s power to terminate student loans.

5. Economic Impact / Inflation / Equality and Justice

Fifth, Biden will likely conduct various impact analyzes before deciding on a large-scale student loan freeze. For example, will foreclosure on student loans boost the economy? Will student loan forgiveness increase inflation? What Does Student Loan Forgiveness Mean for Equality and Justice?

6. Political Implications of Student Loan Forgiveness

Finally, Biden will weigh the policy implications of forgiving student loans. The midterm elections will be held on November 8, 2022, and more than 450 members of the House and Senate are up for re-election. At the very least, Democrats could lose control of the US House of Representatives, and a return to a divided government could further delay Biden’s legislative agenda. As such, Biden must determine how a decision to forgive student loans will affect his party’s electoral prospects. Rep. Alexandria Ocasio-Cortez (D-NY) has said Biden must cancel student loan debt or risk alienating a large constituency of unwilling Democrats. These voters say Biden promised student loan forgiveness and he must deliver. However, Biden also does not want to alienate moderates and independents who could help the Democrats retain control of Congress. Moderate and independent voters may view broad-based student loan forgiveness as prohibitively expensive, poorly targeted, and likely to fuel inflation during a recession.

Expect a student loan forgiveness decision within weeks. Regardless of Biden’s decision, the student loan payment pause ends on August 31, 2022. This means federal student loan payments will resume beginning September 1, 2022. Now it’s time to prepare for student loan repayments. Know these great options to pay off student loans faster:

Student Loans: Related Reading

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