President Joe Biden should decide whether to extend the student loan payment pause and enact wide-scale student loan cancellation today.
Here’s what you need to know — and what it means for your student loans.
Student loan borrowers are eager to know what the future holds for their student loans. Will the student loan payment pause be extended? Will your student loans get cancelled? It’s time for the president to decide.
Student loan payment pause: borrowers should know when payments are due
(A new proposal would extend student loan payment pause and cancel student loans). Federal student loan payments have been paused since March 2020. At the start of the Covid-19 pandemic, Congress delivered historic student loan relief to borrowers, including no mandatory federal student loan payments. President Donald Trump and Biden collectively have extended this temporary student loan payment pause five times. This means that no student loan borrower has been require to make any federal student loan payments since Biden has been president. (Bombshell report claims this student loan servicer misled student loan borrowers). Now, there are whispers that Biden could extend the student loan payment pause for an unprecedented sixth time. Biden should announce today whether he will extend the student loan payment pause, or whether student loan payments will restart after May 1, 2022. With approximately one month remaining until student loan payments are scheduled to restart, student loan borrowers need certainty either way. Otherwise, it’s difficult for them to plan their financial future. (Republicans want to end the student loan payment pause). White House Chief of Staff Ron Klain has hinted that Biden could extend relief. The U.S. Department of Education also asked student loan servicers to stop notifying student loan borrowers about the restart of student loan payments on May 1. However, the president hasn’t commented publicly and borrowers may be uncertain. It’s time to remove the speculation so that borrowers can plan accordingly.
(Biden could extend the student loan payment pause forever)
Student loan cancellation: will your student loans get cancelled?
While Biden has clear executive authority to extend the student loan payment pause, Biden doesn’t have clear legal authority to enact wide-scale student loan cancellation. (Student loan cancellation and the student loan payment pause are confusing. Here’s what to know). Progressive Democrats in Congress such as Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) argue that Biden has existing legal authority from the Higher Education Act of 1965, which they say empowers the U.S. Secretary of Education to enact wide-scale student loan cancellation of any amount for an unlimited number of student loan borrowers. Others, including Biden and Speaker of the House Nancy Pelosi (D-CA), say that only Congress can enact wide-scale student loan cancellation. Biden has cancelled $17 billion of student loans, which is the most of any president in U.S. history. Last week, Biden announced plans to cancel $6.2 billion of student loans.
Biden should definitively tell student loan borrowers whether only Congress can cancel student loans. He has certainly suggested multiple times that he doesn’t think he has the power to do so. However, the White House is still engaging in a debate with supporters of wide-scale student loan cancellation, which has created confusion for student loan borrowers. The best way to clarify this disconnect to state clearly his plan. The president can announce a plan to enact wide-scale student loan cancellation. Alternatively, the president can state he doesn’t have any legal authority, won’t enact wide-scale student loan cancellation and Congress will need to act. Or, the president can cancel student loans for borrowers who are struggling financially, such as low-income earners, those impacted by the Covid-19 pandemic, or those student loan borrowers who are in student loan delinquency or student loan default. Again, clarity for student loan borrowers is paramount. Otherwise, some student loan borrowers are expecting student loan relief when it may never come. This may impact their ability to make financial decisions and other life choices.
(Here’s who won’t qualify for $6.2 billion of student loan cancellation)
Student loans: final thoughts
The student loan payment pause and student loan cancellation are straightforward decisions for some, but multi-dimensional, complex decisions for others. Certainly, there are competing policy, financial, political and other implications connected to these decisions. The sooner student loan borrowers know what to expect, the sooner they can make essential financial choices about their future. No matter what the president decides, leading with transparency and urgency will help avoid confusion and uncertainty.
Currently, student loan payments will restart soon. Here are some popular ways to save money on your student loans:
Student Loans: Related Reading
Here’s who won’t qualify for $6.2 billion of student loan cancellation
New proposal would extend student loan payment pause and cancel student loans
Biden could extend the student loan payment pause forever
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