Pressure is mounting on President Biden to cancel student loan waivers.
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Student loan termination and forgiveness was a hot topic last month as consumer rights advocates and Democratic leaders in Congress pushed President Biden to action.
Last week, House and Senate Democratic leaders reintroduced a resolution calling on President Biden, through executive action, to waive $ 50,000 in student loans for each borrower. The effort reflects similar resolutions made by Congress last year.
The new legislative push to cancel student debt coincides with additional efforts by organizations advocating student loan borrowers. At least 328 organizations, including prominent trade unions and civil rights groups, have signed a letter calling on President Biden to cancel the student debt.
Last week, the Biden government openly embraced the idea of canceling student loan debts through executive action under the Higher Education Act. There is debate over whether the president would have the power to enact comprehensive student loan waiver by executive order, but the White House indicated that it is considering the legality of that path.
Proponents are concerned, however, that even if some form of student loan termination (either unilaterally by President Biden through executive ordinance or through congressional law) is enacted, some borrowers will be excluded.
Student borrowers with higher incomes
Moderate Democrats, and even some student loan advocates, have suggested that any student debt relief program should be limited to lower-income borrowers, as higher earners would be better able to repay their loans.
However, if there are income limits, it is unclear what those limits would look like. Senator Elizabeth Warren (D-MA) had previously suggested restricting relief to borrowers making less than $ 250,000 a year. Biden had previously advocated an annual income limit of $ 125,000 during his campaign as part of his own student loan scheme. Senate minority leader Chuck Schumer (D-MA) also recently touted the same income limit. It is unclear whether (or how) that income limit would take into account factors such as marriage, geographic location, cost of living, or loved ones.
The debate about income limits for student loan issuance could mirror the current debate about income limits for stimulus checks. As part of the next COVID-19 stimulus package, President Biden and Progressive Democrats have pushed for $ 1,400 economic checks aimed at singles with an annual income of less than $ 75,000 or married couples with an annual income of less than $ 150,000 – Dollars are restricted. But moderate Democrats (especially in the Senate) are pushing for lower income caps.
Student loan borrowers with college and professional degrees
Similar to income concerns, some critics of student debt relief argue that the benefits should be targeted towards working and middle class borrowers. The legislature has expressly identified borrowers with university and professional degrees, such as doctors and lawyers, as not worthy of a broad student loan being granted.
It could be problematic to exclude borrowers simply because of their educational level or a similar type of student loan (like Graduate PLUS loans that are only given to Graduate School borrowers) as many of these borrowers are still struggling with debilitating debts and low Income.
Borrowers for student loans with higher balances
Many advocates of student loan waivers put caps on the amount that can be canceled. While Democratic Senate leaders and House progressives have pushed for $ 50,000 forgiveness on student loans, Biden has publicly expressed his support for $ 10,000 forgiveness. Cancellation of $ 10,000 student loans would eliminate all student loan debt for an estimated 16.3 million borrowers, or 36 percent of all borrowers, and reduce loan balances by 50 percent for an additional 9.3 million, an additional 20 percent of all borrowers.
Could student loan issuance be restricted to borrowers with lower balances? Or could borrowers with higher balances still cancel some of their student loans? And would these borrowers have additional options for managing their remaining balance, such as refinancing their remaining loans at reduced interest rates? At this point in time, these questions are still largely unanswered.
Parents PLUS borrowers
Parent PLUS loans are given to the parents of an undergraduate student. The parents are solely responsible for the repayment. Parent PLUS loans are typically high-yield loans with far fewer repayment options than other types of federal student loans.
Studies show that some Parent PLUS borrowers are struggling with dwindling savings. Parent PLUS loan default rates are increasing and more than half of Parent PLUS borrowers have experienced some sort of interruption in regular, on-time monthly payments.
However, it is unclear whether Parent PLUS borrowers would be included in the comprehensive student debt relief program. Many Parent PLUS borrowers would not qualify as “low income” even when faced with huge balances and high interest rates. Biden’s government recently proposed that Parent PLUS loans could be included in a student loan forgiveness initiative, but during his campaign, Biden had emphasized the relief that would be offered to students.
Borrowers for private student loans
If the Biden administration concludes that an executive move to cancel student debt is legal, any resulting relief would likely be limited to federal student loans. The president’s power to compromise under the Higher Education Act, cited by proponents of unilateral student debt relief, would only apply to federal student loans; the Ministry of Education does not have the power to unilaterally terminate private student loans.
While this could deter private student loan borrowers from canceling student debt, Congress could pass a law granting or canceling private student loans. Last year the House Democrats did just that. Rep. Madeleine Dean (D-PA) offered an amendment to the National Defense Authorization Act that would have provided borrowers with up to $ 10,000 in emergency aid repaying personal student loans. This amendment passed the House of Representatives in July but was never adopted by the Republican-controlled Senate. With the Democrats now holding tight majorities in both chambers, similar laws could come back on the market. But whether there would be enough support in the Senate to overcome a filibuster is unclear.
further reading
Can Biden cancel private student loans? 3 options
Biden supports the cancellation of student debt and expresses his openness to action by the executive branch
Democrats take new steps to pressure Biden to cancel student debt – will it work?
Senators Unveil Comprehensive Bill To Pay Off Student Loans And Medical Debts In Bankruptcy
3 reasons why Biden excluded student loan facilitation from the stimulus – and what it means for borrowers
6 Student Loan Reforms Possible With a Democratic Senate
source https://collegeeducationnewsllc.com/could-these-student-loan-borrowers-be-excluded-from-bidens-forgiveness/
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