Why Biden Has Focused On This Student Loan Cancellation

President Joe Biden (Photo by Ethan Miller / Getty Images)

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This was President Joe Biden’s approach to student loan cancellation.

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

Student Loans

Since taking office in January, Biden has canceled $ 3 billion in student loans. Biden has focused on targeted student loan cancellation, which means that Biden has canceled student loans for specific groups who have a specific and identifiable reason for the student loan cancellation. In some cases, these student loan borrowers received full cancellation of the student loan and in other cases partial cancellation of the student loan. For example:

1. Biden has canceled $ 500 million in student loan debt for 18,000 student loan borrowers under the student loan repayment borrower defense rule.
2. Biden canceled $ 1 billion in student loans for 72,000 borrowers.
3. Biden canceled an additional $ 1.3 billion in student loans for 41,000 borrowers with total and permanent disabilities.
4. Biden granted student loan relief to 1.1 million student borrowers who defaulted on their FFELP loans.

Here are 3 reasons why Biden has focused on targeted student loan cancellation:

1. The targeted cancellation of student loans is specific and measurable

The targeted cancellation of student loans is specific and measurable. In contrast to broad student loan cancellation – which, for example, cancels student loans for a large cross-section of student loan borrowers based on loan type or income – targeted student loan cancellation is tied to, or seeks to remedy a specific economic or legal injustice to create another specific, social injustice. When Biden canceled his first $ 3 billion in student loans, he can clearly explain why the student loans were canceled in each individual case. This does not mean that widespread student loan cancellation might not fit an “economic injustice” or “societal injustice”, but it is more difficult to sell from the public perspective compared to deliberate student loan cancellation. This may be one reason Congress did not pass a large-scale student loan termination bill.

2. Targeted termination of the student loan is based on the law

The targeted cancellation of student loans is based on clear, existing and unambiguous law. There is no question that student loan termination due to total and permanent disability, or the borrower’s objection rule for repayment are well-defined rules available to the Biden administration to reverse student loan debt. In comparison, the legal basis for widespread student loan cancellation is arguably ambiguous. For example, Senate Majority Leader Chuck Schumer (D-NY) and Senator Elizabeth Warren (D-MA) have argued that the Higher of Education Act of 1965 gives Biden the unilateral power to cancel student loans through an executive order. They cite Section 432A of the Higher Education Act of 1965 as evidence that the Department of Education can cancel student loans because Higher Education gives the Department of Education the power to “change, compromise, relinquish, or release rights, titles, claims, liens “. , or claim, however acquired, including any participation or redemption rights. ”However, the law does not specifically state that the President or the Department of Education may unilaterally terminate any borrower’s student loan without further approval from Congress. Even if Biden canceled hundreds of billions of dollars in student loans, legal challenges are likely. In addition, courts are unlikely to allow a branch of government to act unilaterally on what appears to be an ambiguous text.

3. A targeted cancellation of the student loan is less costly for the taxpayer

Termination of the student loan is not cheap. Estimates put it between $ 400 billion and $ 1 trillion, depending on the size of large student loan cancellations. There were also concerns about who would benefit from canceling the student loan. New research shows that canceling student loans could benefit the wealthy more than low-income borrowers. Of course, the student loan cancellation amount depends on several factors including the student loan debt amount, the number of borrowers on the student loan, and other limiting factors such as income and loan type. By deliberately canceling student loans, Biden saved taxpayers money. Opponents of the targeted cancellation of student loans say that it does not go far enough: Not enough student loan borrowers and not enough student loan debt have been canceled. Opponents also say that student loan cancellation will boost the economy because student loan borrowers who receive student loan waiver will spend their money elsewhere in the economy. However, against the backdrop of the student loan cancellation, Biden is creating an economic recovery from the Covid-19 pandemic. There are several moving parts, from stimulus checks to infrastructure spending. The question is how does student loan termination fit into this bigger puzzle, and if so, how much money should be allocated to student loan termination as Biden is helping Americans recover economically.

Cancellation of student loan: the next steps

Will your student loan be canceled? Yes, it’s possible. Has Biden finished canceling the student loan? Probably no. The question is what the termination of the student loan will look like in the future. Will there be a full student loan cancellation, targeted student loan cancellation, or both? At the very least, there will likely be a more targeted student loan cancellation. To date, there has been no major cancellation of the student loan by Congress or the President. While the Department of Education is reviewing legal options for canceling student loans, it has been almost four months since that process began. It is unclear when the Department of Education will provide the president with a non-binding legal opinion on large-scale student loan cancellation, whether the president can lawfully issue large-scale student loan cancellation, or whether Congress must act. Last month, the Department of Education held hearings on student loan termination and student loan forgiveness, including ways to improve those programs to help more student loan borrowers get student loan relief. A major focus within Biden administration is also to ensure that the existing student loan programs are functioning efficiently and that the student loan termination is possible for the qualifying student borrowers.

What does this mean for your student loans? There are no guarantees of comprehensive cancellation of the student loan. Targeted student loan cancellation is possible if you qualify, but most people do not qualify. So make sure you have a student loan game plan for your unique financial situation. Here are some smart options to consider for your student loan:

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