Biden Has Now Cancelled $40 Billion Of Student Loans This Way

President Joe Biden (Photo by Scott Eisen / Getty Images)

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President Joe Biden has now cut more than $ 40 billion in student loans. This is not a typo.

Here’s what you need to know.

Student Loans

In the ongoing debate over student loan cancellation, the following fact is surprising: Biden has canceled more than $ 40 billion in student loans since taking office in January. Here is the breakdown:

Biden has canceled $ 3 billion in student loans

Biden has now canceled nearly $ 3 billion in student loan by directly canceling the student loan.

Previously, this has been a targeted student loan termination that has influenced certain student loan borrowers to correct a specific injustice under applicable law or regulation. However, this differs from the large-scale student loan cancellation that Senator Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) urge Biden to enact by ordinance. You want Biden to cancel up to $ 50,000 in student loans per borrower on a broad basis (if you’re making less than $ 125,000 and federal student loans only). However, Biden has at least largely canceled the student loan – and it was more than $ 40 billion. Here’s how:

How Biden canceled $ 40 billion in student loans

In March 2020, Congress passed the Cares Act, a $ 2.2 trillion stimulus package that includes student loan relief. This student loan relief granted federal student loan borrowers through September 30, 2021:

• no federal student loan payments;
• 0% interest on federal student loans; and
• no recovery of defaulted student loan debts.

If you are a federal student loan borrower, this is all too well known. By September, student loan borrowers have more than 18 months off mandatory student loan payments. Without an extension, federal student loan payments will resume from October 1st. It is possible for Biden to extend the student loan facility even if the unemployment benefits and eviction moratorium end. However, there is another major dilemma if Biden extends the student loan facility.

Regardless of whether Biden extends this relief for student loans, Biden has already extended this relief for student loans from January 31, 2021 to September 30, 2021 by means of an implementing regulation. That decision alone canceled $ 40 billion in student loan debt for students made of clay. According to the U.S. Department of Education, the temporary deferral of student loans has saved student loan borrowers $ 5 billion per month. Failure to pay federal student loans and the lack of new accruals on their balances effectively gave student loan borrowers $ 5 billion per month for student loan cancellation. President Donald Trump also extended this student loan relief from October 1, 2020 to January 31, 2021, which also cut around $ 20 billion. If you add the period from March 2020 to September 2020, the total student loan cancellation amount is more than $ 90 billion.

Is this really the cancellation of the student loan?

Some may argue that this is not actually a cancellation of the student loan. The student loan cancellation, in their view, is akin to the $ 3 billion student loan cancellation that the Biden administration directly canceled. You might say that saving interest payments isn’t the same thing because it doesn’t feel like your student loan balance has dropped noticeably. However, there are two ways to think about canceling the student loan. The first is to cancel your principal student loan balance, which is the total amount you currently owe. This is the cancellation of the $ 10,000 or $ 50,000 student loan. The second is the cancellation of future interest on that balance. The Warren-Schumer Plan would effect the repayment of existing student loan debts, which for any student loan borrower with a student loan balance remaining would effectively also cancel some future student loan interest as interest would accrue on a lower student loan balance. However, Biden’s decision to extend the student loan deferral – which resulted in $ 5 billion in savings every month – is another form of student loan cancellation. Why? While their student loan balance has not been reduced, student loan borrowers have saved that money directly and do not have to repay those savings. It is important that this termination of the student loan does not exclude future termination either on a broad basis or in a targeted manner. Biden or Congress can still cancel student loans up to $ 10,000 or $ 50,000 or other number. However, it is important to note that Biden has waived more than $ 40 billion in student loans since taking office as president and student loan borrowers will cancel $ 90 billion in student loans through September 30, 2021. Whether that’s too much, too little, or just enough. Student loan forgiveness ultimately rests with the President and Congress.

It is unclear whether or when there will be further cancellations of student loans. This is why it is important to be in control of your student loans. Consider all of your student loan repayment options based on your individual circumstances. Here are smart options:

Student Loans: Read More

Biden can extend the facilitation of the student loan beyond September 30, 2021, even if the unemployment benefit and the eviction moratorium end

Biden has now canceled $ 1.5 billion in student loans this way

Is this a game changer for student loan termination?

Supreme Court Denies Student Loan Termination – Here’s What Happened

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