These three messages are sent when a student loan is canceled.
Here’s what you need to know.
Now that the student loan exemption has been extended until January 31, 2022, attention is now being drawn to whether student loans will be canceled. Saint Elizabeth Warren, M.D., and Senate Majority Leader Chuck Schumer, New York, say student loan relief is necessary to prevent millions of student loan borrowers from defaulting. They say canceling the student loan is the next logical step. Opponents of the large-scale student loan cancellation say nearly two years of no federal student loan payments, coupled with a student loan cancellation of more than $ 110 billion, is ample student loan forgiveness. They argue that once the student loan exemption expires, there is no need to cancel another student loan debt. The cancellation of the student loan (and its absence) is a clear signal to the student loan borrowers, attorneys, other stakeholders and the general public. Exemption from a student loan without widespread student loan forgiveness also has a separate meaning. Here are 3 messages a student loan cancellation will send (and 3 messages if a large-scale student loan forgiveness does not occur):
1. Canceling a student loan means you can take off the shackles of student loan debt.
Canceling the student loan means that millions of student loan borrowers can get a new financial start. With less or no student loan debt, student loan borrowers of any age can have extra money to invest in their future or their local communities. Moving away from stimulating the economy and starting a family to buying a home and investing in retirement – canceling a student loan could make a financial difference for millions of people.
2. Cancellation of the student loan means that student loan borrowers who are in difficulty have the right to vote.
Canceling a student loan is a signal to student loan borrowers who are fighting to keep them voting. If you are struggling with student loan debt, you often feel isolated. You may feel trapped and unsure of where to go for financial help. Student loan forgiveness tells these student loan borrowers that their representatives are listening to their concerns and actively addressing the issue.
3. Cancellation of student loan helps eliminate inequality
The abolition of the student loan is also a signal that inequalities in higher education, including student loan obtaining and access to higher education, among other things, must be addressed immediately. Warren and Schumer have highlighted these issues, including economic, racial and gender inequality, and widespread student loan forgiveness could be the first step.
No cancellation of student loan also sends 3 messages
There is no guarantee that the large-scale student loan will be canceled. President Joe Biden may not have the legal authority to revoke a large-scale student loan. Congress is reluctant to forgive widespread student loan forgiveness. What is left for student loan borrowers hoping for a student loan to be forgiven? While student loan forgiveness may not happen, Biden is actively working to provide student loan exemptions to millions of student loan borrowers. After becoming president, Biden canceled $ 3 billion in student loans. He renewed his student loan exemption twice. Among other accomplishments, Biden has pledged to reform the government service loan forgiveness program, simplify income-driven repayment plans, and hold student loan servicers accountable so that student loan borrowers get a fair shake-up. If there is no student loan cancellation, he can also send the following 3 messages:
The lack of student loan cancellation means that student loan borrowers have other options to obtain student loan forgiveness.
Canceling a student loan does not mean that student loan borrowers cannot receive student loan forgiveness. Rather, canceling a student loan means there will not be a one-time event that will cancel some or all of the student loans at once for a large group of student loan borrowers. There are several programs that help student loan borrowers obtain full federal loan forgiveness after meeting certain requirements. Student loan borrowers can obtain student loan forgiveness through an income oriented repayment program such as IBR, PAYE, REPAYE, and ICR after 20 or 25 years of student loan repayment. Student loan forgiveness is also available through the student loan forgiveness program for student loan borrowers who work for a qualified government service or nonprofit employer, make 120 qualifying student loan payments, and fulfill other requirements.
No student loan cancellation means that the student loan borrowers have received sufficient significant student loan exemption.
Not having a student loan cancellation can also mean that student loan borrowers have received significant student loan benefits. For example, until January 31, 2022, student loan borrowers received nearly two years of federal student loan payments, 0% interest on federal student loans, and no collection on student loans in the event of default. Non-payments by borrowers of student loans were also counted as payments for the purposes of income-based repayment plans and forgiveness of government service loans. Collectively, student loan borrowers will receive over $ 110 billion in student loan cancellations as a result of the student loan exemptions created by Congress under the Cares Act, including multiple extensions under both Biden and President Donald Trump. Hence, unless there is further widespread student loan forgiveness, the message may be that student loan borrowers have received significant student loan benefits. This is not to say that student loan borrowers are still struggling, but the message from elected representatives to student loan borrowers is that federal taxpayer subsidies may no longer be available.
Canceling a student loan may not be the best strategy for helping student loan borrowers.
No amount of student loan cancellation can make it clear that large-scale student loan forgiveness may not be the best strategy for solving college education problems. The main problem with higher education is the exponential rise in tuition fees. Some argue that a one-time student loan cancellation will help current student loan borrowers, but will not solve the underlying problem in any way. Critics also say that a one-time student loan cancellation will not help prospective student loan borrowers, lower tuition fees, or reduce the student loan amount. Others say that canceling student loans does not require colleges and universities to be held liable if their students fail to pay off student loans or have a high debt-to-income ratio. No student loan cancellation can signal that Congress needs to develop a more comprehensive plan to deal with the student loan debt problem.