Here’s the current state of President Biden’s student loan forgiveness plans – Forbes Advisor

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Amid continued pressure, President Biden has yet to decide whether to forgive student loans for federal borrowers.

But he asked the education secretary Miguel Cardona to hand him a note on whether the president can legally write off up to $ 50,000 in student debt without Congressional approval, according to a Politico interview with White House chief of staff Ron Klain.

“I hope we see this in the next few weeks,” Klain said in the April 1 interview.

While student loan borrowers await news of Biden’s next memo and decision, members of Congress and other organizations have continued their campaign to encourage widespread student loan forgiveness. Here is the latest on the debate.

Senate hearing on student debt highlights potential impact of cancellation

A Senate subcommittee held an April 13 hearing on student debt, specifically how it interacts with racial justice and economic issues.

Subcommittee chair Senator Elizabeth Warren (D-MA) began the hearing by revealing new data from the US Department of Education. It showed that 36 million of the 43 million borrowers with federal student debt – about 84% – would see all of their debt wiped out if Biden forgives $ 50,000 in loans per borrower. Of that group, 3.1 million borrowers have held their loans for more than 20 years, Warren said.

To date, Biden has expressed support for the cancellation $ 10,000 in federal loans per borrower as a Covid-19 relief measure. But Warren and other members of Congress argued that Biden had the power to write off loans of up to $ 50,000 per person through executive action through the Higher Education Act.

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Hundreds of organizations support student debt cancellation

The pressure intensified on April 13 when 416 community and professional organizations signed a letter to Biden urging him to cancel student debt. The letter was originally sent in November 2020 and again in January, but 85 more groups have joined the initiative this month.

The letter reminds Biden that he supported a $ 10,000 debt cancellation as a presidential candidate.

“The cancellation of the administrative debt will allow real progress to be made on your priorities for racial equity, economic recovery and the Covid-19 relief campaign,” he said. Groups that signed the letter include the American Civil Liberties Union (ACLU), the American Association of University Teachers, Greenpeace, the National Domestic Violence Hotline, and the Service Employees International Union.

The letter also calls on Biden to use his executive power to write off student debt, as recommended by Warren and others, rather than working with Congress to pass a law.

“We call on you to keep the promise of the Biden-Harris racial economic equity plan by immediately canceling federal student debt through executive action,” the letter reads.

What could student loan forgiveness look like?

Federal borrowers student loans got a glimpse of student loan cancellation last year: they haven’t had to make payments since March 2020, when the Department of Education implemented a Covid-19 student loan abstention program. Interest was also set at 0%. This means that borrower balances do not increase during this period. The program is in place until at least September 30, 2021.

Student loans may still be a burden on federal borrowers, but they have been able to glimpse bank accounts with no loan payments debited in recent months thanks to Covid-19 relief efforts. This could make the resumption of loan repayments difficult for borrowers to deal with, especially if they are still experiencing financial difficulties as a result of job loss or medical problems, for example.

In addition to forbearance from Covid-19, other recent administrative policies have offered smaller groups of borrowers more flexibility.

Following a disposition in Biden’s latest Covid-19 Recovery plan, student loan borrowers will not pay taxes on forgiven loan balances between 2021 and 2026. Some experts believe this could make widespread loan forgiveness more feasible and more acceptable to borrowers since they will not have to pay tax on the amount remitted.

The Education Department also announced in March that it simplify the loan forgiveness process for students who were victims of fraud at their colleges, which resulted in a complete cancellation of federal loans for 72,000 borrowers. While these changes signal the administration’s concern for some borrowers – and the potential opening to additional forgiveness levels – the next few weeks may seem like a stalemate for millions of other student borrowers awaiting the decision to Biden.

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