President Joe Biden has canceled $32 billion in student loans, but large-scale student loan forgiveness is still lacking.
Here’s what you need to know — and what it means for your student loans.
Biden is potentially days away from one of the biggest decisions of his presidency: the large-scale cancellation of student loans for more than 40 million student borrowers. Biden has promised to announce his decision on the blanket student loan forgiveness by August 31, 2022. That’s the same day the student loan payment break ends. However, with days to go, Biden remained silent on both the general student loan forgiveness and the student loan payment pause.
Student loan forgiveness: Biden forgave $32 billion in student loans
Since becoming president, Biden has forgiven nearly $32 billion in student loans, including:
- Defense of the borrower until reimbursement: $13 billion in student loans for 1 million student borrowers who received a student loan discharge through Borrower Defense for Student Loan Repayment and School Closures;
- Public service loan forgiveness: $9.6 billion in student loans for 175,000 student borrowers; and
- Total and permanent disability: $9 billion in student loans for over 425,000 student borrowers due to total and permanent disability.
Student loan forgiveness: What Biden’s student loan forgiveness means for broad student loan relief
There are two ways to view Biden’s student loan cancellation date.
- No General Student Loan Cancellation: Biden’s $32 billion student loan forgiveness is a ‘replacement’ for broad student loan forgiveness; Where
- Targeted + Broad Student Loan Cancellation: Biden’s targeted student loan cancellation is a precursor to large-scale student loan cancellation.
No general student loan cancellation
Student borrowers are trying to avoid a nightmare scenario of no student loan forgiveness and the end of the student loan payment break. That said, Biden’s $32 billion student loan forgiveness might be the only student loan forgiveness borrowers could get. One theory is that Biden is accelerating student loan forgiveness because he won’t embrace a broad student loan forgiveness. Biden has now canceled more student loans than any other president. Its goal is to simplify student loan repayment and expand access to student loan forgiveness so that more student borrowers get student loan relief.
Targeted Cancellation of Student Loans + General Cancellation of Student Loans
An alternative theory is that Biden will adopt both a targeted student loan forgiveness and extensive student loan waiver. If this theory is correct, then Biden’s $32 billion student loan forgiveness is a precursor to broad student loan relief. This theory is based on the idea that Biden can continue to increase student loan forgiveness for specific borrowers while canceling student loans for all student borrowers. For example, Biden could cancel $10,000 in student loans for all borrowers while easing rules for large-scale student loan forgiveness.
Student loans: next steps
Biden’s immediate next steps are clear: to ensure transparency in his decisions on large-scale student loan forgiveness and student loan payment pausing. Expect decisions on both within days. Currently, federal student loan repayments will resume on September 1. Without advice, borrowers can feel uncertain about their financial future. Will student loan repayments start again? Will your student loans be forgiven? Student loan borrowers want to know whether Biden’s plans for student loan forgiveness will be limited to targeted student loan forgiveness or will be expanded to include student loan forgiveness for all. Without guidance on pausing student loan payments, for example, borrowers should expect student loan payments to resume. Here are some of the best ways to prepare for student loan repayment and save money: