Incentive Checks Coming Soon, But Student Loan Cancellations May Take Longer Than You Think

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Incentive checks may appear as early as next week, but it may take longer to cancel a student loan.

Here’s what you need to know.

Student loans

After Congress yesterday passed a $ 1.9 trillion stimulus package, incentive check, extended unemployment insurance and other financial assistance are on the way. This is good news for the millions of Americans affected by the Covid-19 pandemic. The same cannot be said about student loan cancellation, But. While Senate Majority Leader Chuck Schumer, NY, said widespread student loan forgiveness was a top political priority in the first 100 days of Biden’s rule, Congress did not provide a specific timetable for the cancellation of student loans. There is also a golden thread: in the new stimulus package, Congress made all student loan forgiveness until December 31, 2025 tax-free. This includes student loan cancellation for both private and federal student loans, including FFELP loans. What happens next with student loan forgiveness? There are 3 possible student loan cancellation plans:

1. Biden will cancel student loans by his order.

Senator Elizabeth Warren (M.D.), who spearheaded the tax exemption for student loan forgiveness for student loan borrowers, says it now removes obstacles for President Joe Biden to cancel student loans under the executive order. Others say the tax exemption on student loan forgiveness now makes it more likely that Biden will cancel student loans. While this tax-free development may be a welcome financial benefit for student loan borrowers, it has nothing to do with canceling Biden’s student loan debt. Biden wants to get $ 10,000 in student loan cancellation, but wants Congress – the legislative branch with constitutional powers – to decide to forgive the student loan. When Biden said he was unlikely to cancel student loans, it was not because of the potential tax burden on student loan borrowers. Biden supports the forgiveness of tax-free student loans, but his point has always been that he does not believe he has the legal authority to cancel student loans unilaterally without further congressional approval. Biden said he would consider canceling the student loan in accordance with the ordinance and ask the U.S. Attorney General conduct due diligence regarding Biden’s legal authority… However, there is currently no indication that Biden’s stance has changed since the passage of the incentive bill, or that he is likely to continue with widespread student loan forgiveness under an executive order.


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