The long-awaited, just-released secret student loans memo means this for student loan cancellation.
Here’s what you need to know.
The heavily-redacted student loans memo that student loan borrowers have been awaiting since April was finally made public through a Freedom of Information Act request. The memo, which supposedly is about the president’s legal ability to cancel student loans unilaterally without further congressional authorization, was released along with dozens of other emails from the U.S. Department of Education. You won’t get much from the memo itself — the entire memo is redacted. However, the title — “The Secretary’s Legal Authority for Broad-Based Debt Cancellation” — remains. Here’s what this memo means for student loan cancellation:
1. This student loan memo means nothing for student loan cancellation
Based on the heavily-redacted student loans memo that was released, the memo in its current form means nothing for student loan cancellation. The memo is all redacted, so it’s unreasonable to conclude anything regarding student loan cancellation. The title of the memo confirms the topic, wide-scale student loan forgiveness, and how it relates to legal authority. However, this isn’t breaking news. White House Chief of Staff Ron Klain confirmed in April that the Education Department was preparing a memo on this very topic. However, since the memo is redacted, it’s unclear what are the content of the memo, including any potential recommendations for student loan forgiveness. (Student loan forgiveness won’t be available to these student loan borrowers).
2. There’s no evidence the Biden administration “hid” the memo on student loan forgiveness
Some have claimed that the Biden administration purposely “hid” the memo on student loan forgiveness. Members of Congress, including Rep. Ilhan Omar (D-MN) have demanded that the student loan memo be released. However, it’s unclear if this the entire memo, the only memo, or if there is any memo that the Education Department has completed. The redactions are based on attorney-client privileged communication, and shouldn’t be viewed as an attempt to hide the contents of the memo. During the Trump administration, the Education Department wrote a memo on student loan forgiveness, concluding that the president cannot unilaterally enact student loan cancellation without further authorization from Congress. Biden’s presidential campaign staff likely examined student loan forgiveness. It wouldn’t be surprising if the White House and the Education Department also have analyzed the president’s legal authority. So, a singular focus on this student loan forgiveness memo is understandable, but it’s not the definitive memo on student loan cancellation.
3. Biden concluded he doesn’t have legal authority to cancel everyone’s student loan debt
Biden has already determined that he doesn’t have legal authority to cancel everyone’s student loan debt without further authorization from Congress. If he reached the opposite conclusion, Biden would have enacted student loan cancellation of $10,000 for student loan borrowers by now. Biden is free to change his position. However, his focus on targeted student loan cancellation to date, coupled with his repeated call on Congress to pass legislation to cancel student loans, suggests he doesn’t believe that the president has such legal authority. As such, this indicates that he has no plans to cancel everyone’s student loan debt.
4. The memo is non-binding and Biden can choose whether to enact student loan forgiveness
Remember this: a legal memo is a non-binding legal opinion. It’s not a proclamation, a court order or legislation. The president receives all types of policy and legal recommendations. However, as Klain noted in April, the final decision on student loan forgiveness rests with the president. The president can accept or reject the Education Department’s recommendations, as the president does daily from other recommendations that he receives. U.S. Secretary of Education Miguel Cardona says the Biden administration is still exploring student loan forgiveness, suggesting that student loan forgiveness is still alive. It doesn’t appear that Biden is in anyway leaning toward wide-scale student loan forgiveness. However, the Biden administration has made a clear commitment — supported by action — to deliver more student loan relief and more student loan forgiveness for student loan borrowers.
What this means for your student loans
It’s important to understand what this memo represents. If the memo recommends that Biden has legal authority, please don’t conclude that all your student loans will get cancelled. Importantly, don’t think of it as “all we need is the memo to say he can cancel student loans, and then we can get automatic student loan cancellation.” That’s not how it works; it’s only a non-binding recommendation, not a court ruling. Again, Biden will make the final determination. The Education Department doesn’t own private student loans, so the legal analysis is likely limited to federal student loans only. Plus, not every student loan borrower would even qualify for student loan forgiveness. (Here’s who qualifies for student loan forgiveness right now). The leading proposal in Congress, for example, would limit student loan forgiveness only to federal student loan borrowers who earn up to $125,000 annually. So, there may be student loan forgiveness, but may not qualify. It’s unclear when or if the memo on student loan forgiveness will be released. In the meantime, focus on your strategy for student loan repayment. Student loan relief due to the Covid-19 pandemic will expire on January 31, 2022. That should be your number one focus now. Make sure you understand all your options to pay off student loans faster. Here are some popular options for your student loans: