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Last week, Biden has canceled $6.8 billion of student loans. Since he became the president in January, Biden has brought the total student loan cancellation to more than $9 billion. What does Biden’s student loan forgiveness mean?
1. Student loan forgiveness is different from wide-scale student loan cancellation
Biden has focused entirely on targeted student loan cancellation, meaning specific groups of student loan borrowers get student loan forgiveness instead of wide-scale student loan cancellation, meaning every student loan is forgiven.
This forgiveness is applicable for 2 groups of federal student loan borrowers, one those with a total and permanent disability and the second those under borrower defense because they were misled by their college or university.
2. There won’t be a wide-scale student loan forgiveness
Not all student loan cancellations got canceled. Many borrowers who are struggling financially are wondering if they should stop paying students loan.
The President supports student loan cancellation of $10,000, but he has said Congress should cancel the student loan debt.
Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) even if they have managed student loan forgiveness up to $50,000 for student loan borrowers, the legal issues remain.
Even though student loan cancellation will help more student loan borrowers but Biden is not taking of canceling all the loans.
Legal analysis and recommendation have been prepared by the U.S. Department of Education on the president’s power to cancel student loans without further approval from Congress, but that memorandum is not public yet.
The student loans have been successfully canceled gradually and there is no indication that he will stop doing so.
But Congress hasn’t prioritized student loan forgiveness because there are budgets for other deals but wide-scale loan forgiveness is not included in it.
3. Student loan relief commitment
Even if wide-scale student loan cancellation has not worked out frustrating many borrowers along with more than $9 billion of student loan cancellation, student loan relief from the Cares Act has been extended twice during the pandemic.
Resulting in an additional year of temporary student loan forbearance with no new interest accrual for student loan borrowers.
Biden is committed to simplifying income-driven repayment plans, that will result in federal student loan forgiveness after 20 years or 25 years.
He intends to set the Public Service Loan Forgiveness program so that more student loan borrowers can qualify for loan cancellation.
A hearing on a student loan is being held by the Education Department with an expectation to implement changes that can help more student loan borrowers get financial relief.
Reference Source: Forbes
