President Joe Biden is exploring more student loan forgiveness, but not necessarily wide-scale student loan cancellation.
Here’s what you need to know.
U.S. Secretary of Education Miguel Cardona affirmed that the Biden administration is considering more student loan forgiveness. As reported by CNBC, Cardona said today, in response to the last question during a wide-ranging interview, in response to a question on the president using executive authority for student loan forgiveness and student loan debt cancellation, that:
“We recognize that student debt is holding people back,” Cardona said. “And unfortunately, there are many who are in major debt that weren’t even able to finish their degree, who do not have the means to remove that debt. So we’re focused and it’s a priority for me, and for President Biden to make sure that part of the conversation is examining loan forgiveness. Those conversations are continuing.”
Student loan forgiveness: what this means
What does this mean for student loan forgiveness? Cardona said:
- Biden wants to ensure that “loan forgiveness” is a priority;
- Conversations with the Education Department regarding student loan cancellation are ongoing; (How to get approved for student loan forgiveness)
- The Biden administration understands the major impact of student loans and how student debt is “holding people back”; and
- There are student loan borrowers with “major debt” who didn’t finish their degrees and are unable to pay off student loans.
Cardona’s comments seem to keep the idea of student loan forgiveness alive. However, student loan forgiveness may be targeted at student loan borrowers who have “major debt,” “who weren’t even able to finish their degree,” and who “do not have the means to remove that debt.” This doesn’t mean that any potential student loan cancellation would be limited to these student loan borrowers. However, it may imply that the Biden administration could be focused on this constituency as a potential next beneficiary of student loan cancellation. (How to get student loan forgiveness even if you don’t work in public service).
Student loan cancellation: what this doesn’t mean
No mention of wide-scale student loan cancellation
Cardona’s comments did not explicitly state anything about wide-scale student loan cancellation. (Here’s who qualifies for student loan forgiveness right now). The question posed to Cardona was this: “You mentioned that the administration is still sort of considering the executive authority that you all have on debt cancellation, what is this sort of state of that? And where do you see that conversation going?” Importantly, while this may have been the implication, the question didn’t refer to “wide-scale student loan cancellation” through an executive order. Rather, the question referred to “debt cancellation” through an executive order. Biden could consider targeted student loan cancellation or similar student loan relief through executive action. However, any such action may be distinct from mass student loan cancellation. Cardona concluded with his statement to reference exploring mass student loan cancellation as an “option,” but it wasn’t the centerpiece of his response. (Student loan forgiveness won’t be available to these student loan borrowers).
No mention of timing for student loan forgiveness
Cardona also didn’t mention any potential timing for student loan forgiveness. This may imply there is nothing in the near-term related to more student loan cancellation. (How to get student loan forgiveness).
No mention of who would qualify for student loan cancellation
While Cardona discussed student loan borrowers with major debt who haven’t finished their degrees and are unable to repay student loans, Cardona didn’t mention which constituency could be next for student loan cancellation. (Student loan forgiveness won’t be available for everyone, but this plan is available now).
Student loans: next steps
Cardona said the Biden administration is open to explore options to help student loan borrowers, including mass student loan cancellation, but Cardona made it clear that the Biden administration is not waiting on those discussions to be finalized before acting. For example, Biden cancelled $4.5 billion of student loans earlier this month when he announced major changes to student loan forgiveness. The Biden administration also has acted to expand Pell Grants and cancel $11.5 billion of student loans since January. The reality is that there is no immediate, clear path for wide-scale student loan cancellation. As student loan relief due to the Covid-19 pandemic expires on January 31, 2021, student loan borrowers shouldn’t expect wide-scale student loan cancellation on or before that date. (This is how student loan repayment will work when student loan relief ends). This means that student loan borrowers should expect student loan payments to resume — without student loan cancellation — beginning February 1, 2021. That said, the Biden administration is focused on helping student loan borrowers in multiple ways to improve borrower outcomes. This may include future announcements on targeted student loan cancellation on an ongoing basis.
No matter what happens, make sure you understand these smart ways to save money with your student loans: