Biden Canceled $70 Billion in Student Loans, But Here’s What It Means for Your Student Loan Forgiveness

President Joe Biden Really Almost Canceled $70 billion in student loans.

This is what you need to know and what it means for canceling your student loan.

Student grants

If you follow the latest student loan headlines, you know that Biden has aggressively canceled nearly $10 billion in student loans. Over the past eight months, Biden has implemented a targeted student loan cancellation for hundreds of thousands of student loan borrowers. This includes more than $1.5 billion in student loans canceled in this way, and $5.8 billion more this month for these student loan borrowers. At the same time, student loan borrowers who have not yet canceled their student loan are wondering: will my student loans be cancelled? The latest student loan debt statistics show that there are 45 million student loan borrowers who together owe $1.7 trillion. For many student loan borrowers, they want either the total student loan cancellation, including all of their private and federal student loans. Or they support a proposal championed by Senator Elizabeth Warren (D-MA) and Senate Leader Chuck Schumer (D-NY) that would see Biden cancel up to $50,000 per student loan borrower via executive order. If this happened, the U.S. Department of Education estimates 36 million student loan borrowers would cancel all of their federal student loans completely. But what if Biden has already implemented a large-scale student loan cancellation? What if that cancellation of the student loan means that? Biden has canceled nearly $70 billion in student loans? Let’s investigate.

Biden’s student loan cancellation is more than you might think

If you ask most people if Biden has implemented a large-scale student loan cancellation, the answer would be an emphatic no. Large scale student loan cancellation means that all student loan borrowers or most student loan borrowers have received a student loan cancellation. To date, Biden has publicly said that he does not believe he has the legal authority to cancel student loans for all student loan borrowers without further approval from Congress. While Biden supports $10,000 in student loan forgiveness per student loan borrower, he says Congress must act to approve student loan forgiveness and would like to sign student loan legislation. It is a legal issue enshrined in the Higher Education Act of 1965 and, most importantly, in the United States Constitution. Warren and Schumer, who also studied law like Biden, say the Higher Education Act of 1965 already grants the president an existing unilateral power to set an unlimited amount of student loan cancellation for all student loan borrowers. While that issue could be settled temporarily when the Department of Education issues a recommendation on the legal capacity of presidents to establish student loan forgiveness, only a court can make a final determination of the law. However, Biden, with the help of Congress, has implemented a large-scale cancellation of student loans, and there is a good chance that you have already received a cancellation of the student loan.

How Biden Delivered $70 Billion in Student Loan Cancellation for Millions of Student Loan Borrowers

It may not feel like it, but you may have already received a student loan cancellation. Student loan cancellation has become a focus on Capitol Hill. When Congress passed the bipartisan Cares Act in March 2020, the $2.2 trillion stimulus, Congress granted significant relief from student loans, including:

• no mandatory federal student loan payments;
• no new interest on student loans; and
• no collection of student debt in default.

While this student loan waiver is temporary, Congress has effectively converted student loan waivers into student loan cancellations. How? Temporary student loan deferrals in itself seem like simply interrupting your student loan payments. However, Congress has also included a lesser-known provision that says any defaults during the Covid-19 pandemic will count toward student loan waivers. Did you say student loan forgiveness? Let’s break this down further. For federal student loans, you can get student loan forgiveness through an income-driven repayment plan and the Public Service Loan Forgiveness program, among other things. An income-driven repayment plan such as IBR, PAYE, REPAYE, or ICR grants you federal student loan forgiveness after 20 or 25 years, provided you pay off full monthly student loans on time and meet other requirements. Likewise, the public loan forgiveness program requires 120 monthly student loan payments, among other requirements. While the original student loan waiver of the Cares Act was set to expire on September 30, 2020, President Donald Trump has extended the student loan waiver twice, as has Biden. Now it is intended that this temporary postponement of student loans will expire on January 31, 2022. This is a big win for student loan borrowers, because if you haven’t paid any federal student loans since March 2020, you’ll get nearly two years of student loan payments, for example, toward the requirements of a means-tested repayment or the public loan forgiveness program. Counting non-payments on your student loans is basically student loan forgiveness because you didn’t have to make student loan payments, but you got credit for paying those student loans. In total, the Department of Education says more than 40 million student loan borrowers have received $5 billion in student loan cancellations for each month of the Covid-19 pandemic. Biden extended student loan waiver for one year, amounting to $60 billion in student loan cancellations in addition to the nearly $10 billion in student loans he canceled through targeted student loan cancellations. (This is what Biden student loan forgiveness means for your student loans).

Did Biden Really Forgo $70 Billion in Student Loans?

Some will dispute whether Biden canceled $70 billion in student loans. For example, one could argue that Congress canceled student loan debt through the Cares Act and that Trump and Biden simply extended that student loan. Others will say that Biden didn’t even cancel nearly $10 billion in student loans because that student loan cancellation was based on existing law and his education department, led by Secretary Miguel Cardona, executed all student loan debt forgiveness. Still others will say that even if Biden were to cancel some student loan debt, Biden student loan forgiveness represents only a small percentage of total student loan debt and still excludes millions of borrowers from student loan debt. Others will say that unless all of their student loans, or up to $50,000 in student loans, are canceled completely, it doesn’t count as true student loan cancellations. Whatever you believe about student loan forgiveness, whether you think it’s good or bad public policy, these are the latest numbers on student loan forgiveness. Biden has forgiven more student loans than any president and expects to cancel more student loans during his term in office. While student loan cancellations may help more student loan borrowers, it doesn’t mean Biden will cancel everyone’s student loan debt. It is less likely that there will be a large-scale, advance student loan cancellation for all student loan borrowers, or even most student loan borrowers. Instead, Biden is more likely to ensure that student loan borrowers have a fair chance, access simplified student loan repayments, increased student loan forgiveness, and other forms of student loan relief that will bring them closer to the American Dream.

Biden’s large-scale student loan forgiveness may have already happened. If the student loan deferment ends in a few months, make sure you’re prepared. Get your student loans in order and understand all your student loan repayment options. Here are some popular ways to save money:

Student Loans: Related Literature

Biden’s student loan forgiveness means 3 things to your student loans

Are You Eligible for $8.7 Billion in Student Loan Waiver?

Should You Stop Paying Your Student Loans?

Student loan cancellation targeted Capitol Hill today