Stop Believing These 5 Myths About Student Loan Cancellation

President Joe Biden (Photo by Drew Angerer / Getty Images)

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Look out for these 5 myths about student loan cancellation.

Here’s what you need to know.

Student Loans

There is a lot of misinformation out there about student loan termination – who is getting it, how much is there going to be, and when is it going to happen. Make sure you know how to separate fact from fiction. Don’t Believe These 5 Myths About Student Loan Termination:

1. Everyone gets student loan waiver

Myth: “Cancel Student Loans” means that all student loans will be canceled or that each student loan will be canceled.

• Senator Bernie Sanders (I-VT) proposed cutting all student loans, including all $ 1.7 trillion in personal and government student loans.
• However, this proposal is not supported by either President Joe Biden or members of the mainstream in Congress.
• It is unlikely that everyone will have student loan waivers. For example, expect restrictions on income requirements.
• Senate majority Chuck Schumer (D-NY) and Senator Elizabeth Warren (D-MA) have proposed student loans for student borrowers with a Annual income up to $ 125,000. If you earn above this amount, you will not receive any student loans under your plan.

2. Your personal student loans will be canceled

Myth: Biden or Congress will cancel your personal student loan debt.

• Biden suggested canceling $ 10,000 student loans for borrowers. Biden’s plan may only apply to government student loans, not private student loans.
• Likewise, the Schumer and Warren plan only applies to federal student loans.
• While it is possible for private student loans to be canceled, current belief is that only the state student loans would be canceled if there was a widespread student loan cancellation.
• In particular, the cancellation of the student loan would apply to state student loans owned by the U.S. Department of Education. Therefore, this could rule out some FFELP and Perkins loans owned by financial institutions or private investors.

3. Biden can cancel student loans by disposition

Myth: Biden can unilaterally cancel the termination of the student loan by means of an implementing regulation.

• Biden wants to cancel student loans in three ways.
• Despite the rhetoric of some members of Congress, it’s not that easy to say that Biden can cancel the student loan “with the stroke of a pen”.
• Biden has some authority to issue student loans through executive action. For example, since becoming president in January, Biden has canceled more than $ 2.3 billion in student loans for student borrowers.
• The US Constitution gives Congress, rather than the President, the “bailiff” to control federal spending. The most common interpretation is that the President has no unilateral authority to cancel the student loan without further approval from Congress.
• If the president cancels the student loans, that decision will likely be challenged in court. This could delay the granting of student loans to borrowers.
• Biden called on the US Department of Education to conduct a legal review of its authority to issue a comprehensive cancellation of student loans through an executive order.

4th Congress will cut student loans

Myth: There is widespread support in Congress for student loan cancellation.

5. Cancellation of the student loan is the only way to cancel the student loan

Myth: If Biden doesn’t cancel my student loan, I will never get a student loan forgiveness.

• There are several ways to get a student loan waiver.
• While they may not appear immediately, these existing programs can help you save money.
• Income-oriented repayment plans like Income-Based Repayment (IBR), Pay-As-You-Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income Contingent Repayment (ICR) can help you get student loan waivers for your federal student loan after 20 years (Student loan) or 25 years (student loan).
• Income-oriented repayment plans are especially helpful when you’re having trouble paying off student loans or losing your job.
• Until December 31, 2025, any student loan grant that you receive through an income-based repayment plan is tax-free. Congress could extend this provisional provision beyond that date.
• The Public Service Loan Forgiveness program helps student loan borrowers obtain federal student loan issuance if they work full-time for a skilled public service or nonprofit employer and make at least 120 monthly payments on their student loans, among other things.
• There is even a proposal to terminate student loans for all civil servants after 10 years of service, even if they do not meet the student loan requirements.
• Biden is a sponsor of the Public Service Loans Program and has proposed up to $ 50,000 in student loans after five years.

Cancellation of student loan: the next steps

When it comes to student loan termination, there are many moving parts. Biden will review the U.S. Department of Education legal memo that could aid in his next steps to cancel the student loan. Biden will weigh both legal and political considerations, although he may choose another recommendation that Education Minister Miguel Cardona recommends. If Biden cancels student loans by regulation, the cancellation of the student loan could look like this. If Biden has no legal authority to cancel student loans under executive order, Congress would have to act next. Biden has announced that he will sign all student loan forgiveness laws passed by Congress. However, to pass legislation, Congress would have to amend its current leading proposal for the $ 50,000 student loan grant to find a solution that gets more support.

Regardless of whether Biden or Congress decides to cancel student loans, don’t expect all of your student loans to be canceled. For this reason, it is important to consider these other possible options as well in order to save money:

Related reading

The termination of the student loan threatens a serious setback

Biden wants to cancel the student loan in 3 ways

When $ 50,000 in Student Loans is awarded, this is what happens

The forgiveness of the student loan means this for the cancellation of the student loan

source https://collegeeducationnewsllc.com/stop-believing-these-5-myths-about-student-loan-cancellation/