The student loan exemption is ending, but there has not yet been a large-scale cancellation of the student loan.
Here’s what you need to know.
The student loan exemption due to the Covid-19 pandemic will end on January 31, 2022, that is, in less than five months. As 40 million student loan borrowers resume their student loan payments, one thing is noticeably missing: any large-scale student loan cancellation. To his credit, President Joe Biden renewed his student loan exemption twice, which did not include mandatory payments on federal student loans, 0% interest on federal student loans, and no collection of student loan debt in the event of default. This follows two previous extensions by President Donald Trump, as well as a six-month waiver of the temporary student loan passed by Congress in March 2020 under the Care Act, a $ 2.2 trillion stimulus package. Collectively, student loan borrowers will receive 22 months of temporary student loan waiver, resulting in the cancellation of a $ 110 billion student loan. This is in addition to the nearly $ 10 billion in student loan debt that Biden canceled through targeted student loan cancellations. (Find out here if you are eligible for a $ 9.8 billion Biden student loan forgiveness.) However, student loan borrowers say this is only a fraction of the $ 1.7 trillion outstanding student loans.
Student Loan Forgiveness: Legal Debate
Biden argued that he did not believe the president had legal authority to cancel student loan debt unilaterally without further congressional approval. A former U.S. Senator with a law degree in Syracuse, Biden understands the separation of powers enshrined in the U.S. Constitution, which, among other things, only Congress has the authority to authorize federal spending. Student loan debt cancellation is a form of federal spending, and so Biden hinted that Congress would need to approve these additional federal spending to cancel student loan debt. In addition to authorizing disbursements, Congress may also need to authorize the president to cancel any outstanding student loans through an executive order. While this is the opinion of most legal scholars, not everyone agrees with it. Senator Elizabeth Warren (M.D.), a former professor at Harvard Law School, and Senate Majority Leader Chuck Schumer, New York, a Harvard Law School alumnus, say Biden already has such powers under the Higher Education Act 1965 … Biden, Warren, and Schumer agreed on one principle: there must be a student loan forgiveness of at least $ 10,000. However, they also have their own differences. Warren and Schumer want to cancel a student loan of up to $ 50,000 and want Biden to decide on a student loan forgiveness. Biden wants Congress to cancel student loan arrears. As a result, an impasse has arisen. Biden did not sign the executive order, and Schumer did not vote on the student loan forgiveness.
Student Loan Cancellation: Missing Legal Note
Given this ongoing impasse, Biden said in good faith that he would ask for an independent assessment of the student loan cancellation from the US Department of Education. Biden probably already explored his legal options for forgiving student loans as a presidential candidate before shaping his political stance. However, in February, Biden said he would ask the Department of Education for a legal review to assess whether the president would introduce widespread student loan abolition by his decree. The legal question is whether the president has unilateral authority to cancel an unlimited amount of student loan debt for each student loan borrower. This does not mean that Biden will cancel all student loans. However, the legal question is whether Congress has given the President the power to cancel unlimited student loan debt – through the Higher Education Act of 1965 or another law – or whether Congress should grant additional authorization.
“[Biden] asked his secretary of education – who had just been in office for several weeks – as soon as he got down to work for his department to prepare a memorandum of legal authority for the president, and hopefully we’ll see that in the next few weeks, ”White said. This was announced in March by the chief of staff of the House of Representatives Ron Klein. However, the weeks turned into months. More than six months have passed and the Department of Education has not published this memo. It is important to note that there has never been any indication that the memorandum will be published publicly; he can remain confidential.
If a student loan forgiveness memorandum is issued, here’s how Biden will decide to cancel the student loan
As soon as Biden received the student loan forgiveness note, Klein said in March that “[Biden will] look at this legal body. He will consider related policy issues and make a decision. ” While the Biden administration may come to its own conclusion based on the law, the Trump administration previously wrote a legal memo stating that the president does not have the legal authority to enact large-scale student loan abolitions by executive order. If the Biden Department of Education decides that the president can cancel student loans by his own order, then:
- the president will need to decide whether to continue canceling the student loan;
- if Biden proceeds to cancel a student loan, the next question is who will qualify; and
- Biden will also need to determine how much student loan debt needs to be canceled.
Warren and Schumer, leading proponents of widespread student loan forgiveness in Congress, would limit student loan cancellations to only federal student loan borrowers who earn up to $ 125,000 a year. There is no guarantee that even with a legal memo confirming the student loan forgiveness, Biden will cancel any student loan debt. A legal memo is non-binding and different from a law or a court order. The Legal Note also does not preclude any student loan forgiveness action being challenged in court, which could lead to potential delays in the implementation of the student loan forgiveness.
Will your student loans be canceled? There are many ways to get a student loan forgiveness, but getting an early student loan cancellation is more difficult if you do not qualify for the existing federal program. Immediate student loan cancellation is likely to be out of reach for all or even most of the student loan borrowers. If you have student loans, here are some popular ways to save money: