President Joe Biden (Photo by Nathan Howard/Getty Images)
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President Joe Biden has now canceled more than $17 billion in student loans.
Here’s what you need to know — and what it means for your student loans.
Student loans
Biden has now canceled more student loans than any other president. Here is a breakdown of historical student loan relief:
- $6.8 billion for 113,000 borrowers through the cancellation of public service loans;
- $7.8 billion for more than 400,000 student borrowers who are totally and permanently disabled;
- $2 billion for 105,000 student borrowers who were misled by their college or university through borrower defense for student loan repayment; and
- $1.2 billion for student borrowers who attended ITT technical institutes.
(Student loan forgiveness: 5 key takeaways from a major announcement)
Student loan forgiveness: $200 billion in student loan relief for borrowers
Student borrowers have received around $200 billion in student loan relief over the past two years due to the Covid-19 pandemic. In March 2020, Congress passed the Cares Act, a $2 trillion stimulus package that included historic student loan relief. Among other benefits, student borrowers were no longer required to repay federal student loans. Interest rates on student loans have been temporarily set at 0% with no further accumulation of interest. President Donald Trump extended that student loan relief twice, and then Biden approved four more extensions. A total of 37 million student borrowers have not been required to make a federal student loan payment since March 2020. This includes the entire term of Biden’s presidency. In addition to the absence of mandatory payments on federal student loans, student borrowers can count any nonpayment toward the requirements for obtaining student loan forgiveness. For example, this includes canceling student loans through income-contingent repayment and canceling civil service loans. This student loan relief expires August 31, 2022. For a borrower applying for public service loan forgiveness — which requires 120 monthly student loan payments — that borrower will have received nearly 30 months, or 25%, of credit for the requirements for obtaining a student loan forgiveness.
Student loan relief hasn’t made everyone happy
When it comes to student loan relief, not everyone is happy. For some supporters of student loan forgiveness, Biden’s actions show a firm commitment to reforming a broken higher education system. For other supporters, however, there have not been enough student loan cancellations. (If Biden writes off more student loan debt, it could happen before then.) For example, there are 45 million student borrowers who collectively owe $1.7 trillion. Although $17 billion is a substantial amount of student loan forgiveness, some proponents say it only represents about 1% of outstanding student debt. Progressive Democrats in Congress are campaigning for up to $50,000 in student loan forgiveness, while others are calling for full student loan forgiveness. Republicans are also unhappy with Biden’s student loan forgiveness, although for different reasons. While Biden has focused on targeted student loan cancellation, Republicans in Congress oppose large-scale student loan cancellation. They argue that any attempt to enact large-scale student loan forgiveness without additional congressional approval would exceed the president’s legal authority. Republicans also believe that the massive cancellation of student loans amounts to a redistribution of wealth that hurts Americans who do not have student loans or who have never been to college.
Student loan repayments are expected to resume from September 1, 2022. Although the President may extend student loan relief for the fifth time, borrowers should prepare as if this will not happen. You should evaluate all of your options now and choose the best strategy for repaying your student loan. Here are some popular options for repaying student loans:
