5 reasons why Biden didn’t cancel student loans

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Here are 5 reasons President Joe Biden didn’t cancel student loans.

Here’s what you need to know.

Student loans

Has the student loan cancellation been canceled? This is certainly how some student loan borrowers feel. Any hope of large-scale student loan cancellation did not materialize in the first eight months of the Biden presidency. Here are 5 potential reasons Biden hasn’t canceled your student loans:

1. Biden does not have the legal authority to order the cancellation of a student loan

Biden supports cancellation of student loans up to $ 10,000, but he has repeatedly said he does not believe he has the legal authority to order large-scale student loan cancellation. Biden wants Congress – which is the federal branch of government that controls spending – to pass legislation that would write off student loan debt. Biden has said he will sign any student loan cancellation legislation passed by Congress. Biden, like fellow Democratic House Speaker Nancy Pelosi (D-CA), believes in the separation of powers between the legislative (Congress) and executive (president) branches of government. Senator Elizabeth Warren (D-MA) and Senate Majority Leader (D-NY) strongly disagree that the President cannot unilaterally cancel student loans. They interpret the Higher Education Act of 1965 as authorizing the President (through the US Secretary of Education) to write off an unlimited amount of student loan debt for an unlimited number of student loan borrowers. However, while the president has the power to write off student loans, the Higher Education Act does not explicitly state that Congress gives the president the unlimited right to write off student loan debt for anyone a number. unlimited times. It is also unlikely that Congress has abdicated full control over the delivery of student loans to the president and unilaterally removed his constitutional control over federal spending in this area.


2. Student loan forgiveness legal note does not say cancel student loans

There was to be a legal note from the US Department of Education to the president with a legal analysis of the president’s ability to enact a large-scale student loan cancellation without further authorization from Congress. It is not known whether this note has been finalized or presented to the President for consideration. It is also unclear which recommendations are included in the note or whether such an analysis will be made public. Therefore, in the absence of the US Department of Education advising the President that it is legal for the President to cancel student loans on a large scale, there is no clear legal path for the President to act. . It’s important to note that even though the Department of Education says the president can cancel the student loan, there is no guarantee that Biden will cancel the student loans. That said, that doesn’t mean Biden’s next step on student loans is only about Biden’s legal ability to cancel student loans. Biden could still disagree or weigh other political and political considerations that might dictate another course of action.


3. Biden Focuses on Targeted Student Loan Cancellation

Even without large-scale student loan cancellations, Biden has written off more student loan debt than any other president in U.S. history. (Here’s what canceling the Biden student loan means for your student loans). Since becoming president, Biden has canceled nearly $ 10 billion in student loans through targeted student loan cancellation, which is a student loan forgiveness for specific groups of student loan borrowers. More recently, Biden has focused on canceling student loans under applicable law for disabled student loan borrowers and borrowers whose college or university has misled them under the rule of law. the borrower’s defense against repayment. (Find out here if you qualify for $ 9.8 billion in student loan forgiveness). Expect targeted student loan cancellation to continue, with Biden pursuing a piecemeal approach to student loan cancellation rather than implementing full-scale student loan cancellation for every student loan borrower.


4. Student loan relief ends

Temporary forbearance on student loans will end on January 31, 2022. This means that effective February 1, 2022, federal student loan borrowers will resume paying off their student loans at their normal interest rate. It also means that the collection of delinquent student loans will also resume. This may seem like the right time to cancel student loans, given the financial reality that millions of student loan borrowers will be facing. For example, Warren said student loan borrowers are not ready to start paying off student loans and need at least March 31 before student loan payments resume. Warren also says that student loan services are not ready for student loan borrowers to resume student loan payments. The Biden administration is sensitive to these concerns, but also wants to champion an economic recovery from the Covid-19 pandemic. The cancellation of the student loan sends 3 messages. One potential message is that if the economy is recovering, why is it necessary to write off student loan debt at a potential cost of up to $ 1,000 billion? Supporters of student loan cancellation say it is essential financial relief that will help a generation of student loan borrowers achieve financial freedom, raise a family, buy a house, save for retirement and to achieve other life goals. (Here’s what Biden’s student loan cancellation means for your student loans). At the same time, the large-scale cancellation of student loans may be seen as contrary to the message of an economic recovery. Can the economy recover and can student loan cancellation be implemented? Yes, but it’s harder to sell to Congress and the public. (Here’s how to get a student loan discount).


5. Cancellation of student loans to exceed $ 110 billion

On top of the nearly $ 10 billion that Biden forgot as president, student loan borrowers will receive an additional $ 110 billion in student loan cancellations by January 31, 2022. Why? In March 2020, Congress passed the Cares Act, the $ 2.2 trillion stimulus package, which suspended federal student loan payments and temporarily set interest rates on federal student loans at 0%. The US Department of Education estimates that student loan borrowers saved about $ 5 billion per month. The Cares Act was due to expire after six months on September 30, 2020. However, President Donald Trump renewed this student loan relief twice until January 31, 2021. Biden also extended this student loan relief twice until January 31, 2021. on January 31, 2022, the date on which it will definitively expire. Overall, student loan borrowers will benefit from more than 22 months without mandatory student loan repayments, resulting in the cancellation of $ 110 billion in student loans. Biden canceled a total of $ 70 billion in student loans. Opponents of the large-scale student loan cancellation claim it is a substantial forgiveness of student loans. Supporters of large-scale student loan cancellation claim it is only a tiny fraction of the $ 1.7 trillion in outstanding student debt. Canceling student loans has become a priority in Congress. However, if the temperature in Congress is any indication, there are currently no plans to pass legislation for large-scale student loan cancellation – even with Democrats controlling both the House and the Senate.

If you have student loans, don’t expect large-scale student loan cancellation. With student loan relief coming to an end, make sure you are fully prepared for the restart of student loan repayments. Understand all of your options. Here are some popular ways to save money:


Student loans: related reading

Student loan waiver: how much, how to get it and what’s next for student loans

Biden Student Loan Cancellation Means 3 Things For Your Student Loans

Should we stop paying student loans?

Student loan cancellation focused today on Capitol Hill

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