Will Biden cancel student debt with an executive order?

Do you expect some of your student loan to be canceled? Read this first. (iStock)

The majority of college graduates took out federal student loans to fund their education, borrowing an average of more than $ 30,000, according to the National Center for Education Statistics. As outstanding college debt continues to rise, some borrowers seek relief through more advanced measures, such as student loan waivers.

President Joe Biden has campaigned for college debt to be abolished, but getting these types of laws passed may not be as easy as signing an executive order. And with the federal student loan moratorium running out in a few months, you might be wondering what to do with existing student loan debt, especially since refinance rates are at record lows.

Read on to learn more about the likelihood of student loan forgiveness and what to do with your college debt in the meantime. If you’re considering refinancing your personal student loans while interest rates are historically low, visit Credible to compare quotes from multiple lenders at the same time without compromising your creditworthiness.

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Can the President cancel student loans with a disposition?

As a presidential candidate, Joe Biden campaigned for student loan forgiveness. He proposed immediately canceling $ 10,000 of state student loan debt per borrower and canceling all state student debt-related tuition fees from public colleges for those who earn less than $ 125,000 as part of his Build Back Better plan.

But canceling student loans is a promise that has proven difficult for Biden to keep. The president has not included student loan issuance in his latest federal budget proposal, and he has downplayed progressive policy related to college debt relief as a “socialist agenda”.

How did the president keep his college debt relief promise?

The Higher Education Act of 1965 gives the Secretary of Education the ability to “enforce, pay, compromise, relinquish, or release any right to collect federal loans.” However, it is unclear whether this includes widespread debt relief to the extent that progressive candidates seek to provide.

Legal experts disagree on whether the Biden government has the authority to cancel federal debt on student loans. President Biden asked Education Minister Miguel Cardona about a president’s authority to cancel federal student loans, Politico reported in April.

The Department of Education previously stated that the secretary “has no legal authority to provide blanket or bulk termination, compromise, relief, or waiver of major student loan balances.” On the other hand, Senate Democrats, including Senate Majority Leader Chuck Schumer (D-NY), have repeatedly said that the President has the power to cancel student debt.

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While the legality of this approach is still questionable, it seems unlikely that, given his previous statements, Biden will cancel the student loans in both cases by executive order.

Another thing to consider is that college debt relief does not apply to certain borrowers and types of credit. Some borrowers will make too much money to qualify for a student loan, and others have private student loans.

If you are not eligible for student debt relief, consider refinancing your private student loan while interest rates are still low. In the following table you can view potential refinancing rates and prequalify yourself via Credible in order to compare offers tailored to your needs.

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What you can do with your student loan now

You have several options as to what you can currently do with your loans: continue payments, save until payments resume, and refinance your student loans.

If you have federal loans, it may be worthwhile to withhold payments until the moratorium expires on 9/30/2021. You could save up the money you would otherwise spend on your loans and use it to repay a lump sum when payments are resumed – if student loans are not granted.

Refinancing your federal student loans is usually not recommended. While you may be able to secure a lower interest rate on your student loan debt, refinancing with a private student loan would exclude you from federal programs like income-based repayment plans, interest-free deferred payments, and student loan waivers.

Borrowers with private student loans probably wouldn’t qualify for debt relief anyway, so it might be a good idea to refinance those loans while interest rates are at record lows. Obtaining a loan with a lower interest rate than what you are currently paying can save you thousands of dollars over time.

You can use Credible’s refinance calculator to see how much you can save. And as always, you can reach out to a Credible loan officer to see if a refinance is right for you.

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Do you have a finance-related question but don’t know who to contact? Send an email to the credible money expert at moneyexpert@credible.com and your question could be answered by Credible in our Money Expert section.

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