Here’s when Biden could announce student loan forgiveness
President Joe Biden may not decide whether or not to forgive student loans until July or August.
Here’s what you need to know — and what it means for your student loans.
In a frustrating setback for millions of student borrowers, Biden may not announce his decision on large-scale student loan forgiveness until late summer. According to the Wall Street Journal, citing Biden administration officials say the president “will continue to weigh the political and economic fallout of such a decision” to cancel student loans. In late April, the president said he would announce a decision within weeks. However, six weeks later, Biden has not announced whether he will embrace a large-scale student loan forgiveness.
Why Student Loan Forgiveness Was Delayed
There are several reasons why student loan forgiveness has been delayed. For example, Biden can still weigh the political pros and cons of such a monumental policy decision. The White House has denied a report that Biden decided to forgive $10,000 in student loan debt. Proponents of large-scale student loan forgiveness, such as Sen. Elizabeth Warren (D-MA), say this critical student loan relief will stimulate the economy and help student borrowers save extra money for get married, start a family, buy a house and save for retirement. Opponents such as Sen. Tom Cotton (R-AR) say a large student loan forgiveness is a giant wealth transfer that hurts people who didn’t go to college or don’t have a student loan . Biden has forgiven $25 billion in student loans since becoming president. It focused on targeted student loan forgiveness for specific groups of student borrowers. While Biden could continue with targeted student loan relief, the question is whether he will agree to provide large-scale student loan forgiveness to most or all of the 45 million student borrowers.
Biden could reconsider $50,000 student loan forgiveness
Biden has definitely ruled out the possibility of a $50,000 student loan forgiveness. He backed $10,000 in student loan forgiveness, but never the larger amount that Warren and Senate Majority Leader Chuck Schumer (D-NY) have championed. However, a further push from major civic and social groups could prompt Biden to back $50,000 in student loan forgiveness. Why would Biden support more student loan relief? The primary reasons for supporting $50,000 in student loan forgiveness are to reduce disparities and inequities as well as the ability to forgive all federal student loan debt for 36 million student borrowers. That said, the most likely student loan forgiveness scenario is a $10,000 student loan forgiveness with an income cap of at least $125,000.
Biden could also weigh the political fallout
In addition to weighing the political implications and the amount of any possible student loan forgiveness, Biden must weigh the political ramifications. The midterm election is November 8, and the Democrats are expected to lose seats in Congress. This could result in Republicans capturing at least one chamber of Congress, leading to a divided government and stalling the president’s legislative agenda. Progressive members of Congress have argued that large-scale student loan cancellation is key to rallying Democrats to vote in November. Without student loan forgiveness, they argue, voters will choose Republican candidates or simply not vote. The counter-argument is that if Biden were to enact a large-scale student loan forgiveness, it could alienate independent and moderate voters. Democrats need those two constituencies to stay in power in Congress.
Student loans: next steps
If Biden delays an announcement on canceling student loans until July or August, that would be closer to the end of temporary student loan relief on August 31, 2022. This could have significant implications for student borrowers who are waiting to find out if they will get at least one student loan forgiveness. With student loan repayment starting September 1, 2022, now is the time to prepare. Whatever the president decides, you need to be ready with a student loan repayment game plan. Here are some smart ways to save money: