President Joe Biden canceled $11.5 billion in student loans, but here’s what that means for student loan forgiveness.
Here’s what you need to know.
Since becoming president, Biden has forgiven more than $11.5 billion in student loan debt, the most of any president. This includes:
What does this student loan cancellation mean for large-scale student loan cancellation? Will your student loans be forgiven? Let’s explore.
Latest Student Loan Forgiveness: The Details
To date, Biden has used existing student loan forgiveness programs to implement student loan forgiveness. This has included, for example, cancellation of federal student loans through borrower defense until repayment as well as total and permanent disability. Biden’s latest student loan forgiveness, however, brought major changes to student loan forgiveness for public servants. These major changes to student loan forgiveness include:
- what student loan payments count towards student loan forgiveness;
- what types of student loans should be considered for student loan forgiveness;
- which employers qualify for student loan forgiveness;
- when student loan repayments begin to count toward student loan forgiveness;
With the cancellation of civil service student loans, Biden did not choose large-scale student loan cancellation. This means that Biden has not decided to cancel student loans for every official. Instead, Biden, along with the U.S. Department of Education, changed the rules for the Civil Service Loan Forgiveness Program to help more student borrowers get student loan forgiveness.
Does Biden have legal authority to cancel (or not) student loans?
Although there is some debate over how much student loan forgiveness to enact, the main hurdle seems to be legal authority. (Biden is ready to sign a student loan forgiveness, but Congress hasn’t passed any legislation either). Specifically, Biden is backing large-scale student loan forgiveness of up to $10,000, while Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) are backing up to $50,000 student loan forgiveness for student borrowers. So, among the president and these top senators, there is no disagreement about whether a large-scale student loan forgiveness is appropriate. The parties disagree, however, on the amount of student loan forgiveness and who can act to cancel student loans. Biden says only Congress has the legal power to pass legislation to cancel everyone’s student loan debt. Warren and Schumer say Biden has the existing legal authority to cancel everyone’s student loan debt by signing an executive order. (Even if there is large-scale student loan forgiveness, these student borrowers would be excluded).
To break this apparent impasse, in March Biden asked the US Department of Education to issue a non-binding legal opinion on the president’s legal authority to forgive student loan debt. The Trump administration has determined in a nonbinding legal opinion that only Congress, not the president, has the legal authority to cancel large-scale student loans. (Here’s how to get approved for student loan forgiveness). House Speaker Nancy Pelosi (D-NY) also said only Congress, not the president, has the power to enact large-scale student loan forgiveness. To date, neither the White House nor the US Department of Education has released the memo or confirmed whether it has been completed. This prompted several progressive members of Congress – including Rep. Ilhan Omar (D-MN), Rep. Alexandria Ocasio-Cortez (D-NY) and Ayanna Pressley (D-MA) – to urge the President to cancel student loan debt for every student borrower and release the memorandum on student loan cancellation by October 22, 2022.
Targeted student loan cancellation suggests there is no large-scale student loan cancellation
As progressive Democrats continue to pressure the president to cancel everyone’s student loan debt, Biden has given no indication that he will use an executive order to cancel all student loan debt, or even up to to $50,000 in student loans. (If Biden doesn’t cancel your student loans, do these 3 things). Biden has always favored targeted student loan cancellation, which is student loan cancellation for specific types of student borrowers, rather than large-scale student loan cancellation. To date, the $11.5 billion in Biden student loan forgiveness has been forgiven in a targeted fashion. Sure, Biden can change his mind and go for a full-scale student loan forgiveness. (Here are 17 ways Biden is fixing the student loan forgiveness). However, his actions to date do not suggest this course of action. Each sample Biden student loan forgiveness was made through an existing student loan forgiveness program authorized by Congress and the U.S. Department of Education. Moving to large-scale student loan forgiveness could be challenged in court. Why? Even though Biden agrees with Warren and Schumer’s argument that the Higher Education Act of 1965 grants a president the executive power to write off everyone’s student loan debt, the legal language regarding The president’s legal ability to cancel all student loan debt in this law is, at a minimum, ambiguous. If Biden proceeds with student loan debt forgiveness under the Higher Education Act, it could likely result in litigation, which could delay any potential student loan forgiveness for months or even years.
The bottom line is that Biden will continue to cancel student loans. However, this student loan forgiveness will target specific student borrowers rather than all student borrowers. Most student borrowers will likely not be eligible for student loan forgiveness through Biden Student Loan Forgiveness. That said, there are still opportunities to repay student loans. With student loan relief ending soon, it is essential that you understand all of your student loan repayment options. Here are some popular ways to save money with your student loans: