Here are 3 reasons why President Joe Biden could cancel student loans and extend the student loan payment pause.
Here’s what you need to know — and what it means for your student loans.
Biden is days away from announcing his decision on large-scale student loan forgiveness and the student loan payment pause. Whatever he decides, over 40 million student borrowers are about to receive news that will have a lasting impact on their financial lives. Here are three reasons why Biden might decide to implement a broad student loan forgiveness and another student loan payment pause.
1. Student loan forgiveness and student loan payment suspension: Biden backed both policies
First, Biden has openly supported both large-scale student loan cancellations and student loan payment suspensions. Since his presidential campaign in 2020, Biden has backed $10,000 in student loan forgiveness for borrowers. While progressive Democrats such as Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) want Biden to forgive $50,000 in student loans, Biden has expressed disagreement with that amount student loan forgiveness. In contrast, Biden repeatedly referenced $10,000 in student loan relief. Similarly, Biden has extended the student loan payment break four times since becoming president. Now, the student loan payment break ends in a few days. Biden has been silent on restarting student loan repayments. That said, Biden hasn’t indicated he won’t extend student loan relief for the fifth time.
2. Pausing Student Loan Payments: Borrowers Will Be Given Sufficient Notice
Second, the Biden administration has assured student loan borrowers that they will have ample notice before student loan repayments resume. For example, US Secretary of Education Miguel Cardona indicated that student borrowers would have enough time to prepare for the restart of student loan repayments. Historically, Biden has provided several weeks notice if he decides to extend the student loan payment break. However, with about ten days remaining until the end of the student loan payment pause, it would be unusual for Biden to wait that long if he planned to end the student loan payment pause. That said, student borrowers know that the student loan moratorium is temporary and that student loan repayments could resume on September 1, 2022, absent another extension.
3. Biden canceled $32 billion in student loans
Biden has forgiven $32 billion in student loans since becoming president. That’s more than any other president, demonstrating Biden’s commitment to student loan forgiveness. That said, Biden has focused on targeted student loan forgiveness to benefit specific groups of student borrowers. For example, this includes government officials and borrowers who have been misled by their college or university into defending the borrower in student loan repayment. Biden has made significant changes to student loans, even as he delayed announcing his new student loan plan. Republicans have presented a new plan on canceling student loans, which differs dramatically from a draft proposal from the Biden administration. Leaked Department of Education documents show a plan to forgive $10,000 in student loans for all federal borrowers earning less than $150,000.
Student loans: next steps
Expect a decision on large-scale student loan cancellation and suspension of student loan payments any day now. Biden has pledged to announce his student loan forgiveness plan by August 31. His decision on whether to extend the student loan payment pause will likely come simultaneously or shortly after he decides on student loan forgiveness. Notably, there is no guarantee that Biden will implement either of these student loan plans. For example, Biden has remained silent on the student loan payment pause. So, without further notice from Biden, student borrowers should prepare for the restart of student loan repayments on September 1. Here are some of the best ways to prepare so you can pay off student loans faster: