One of my main goals in 2021 is to finish paying off both my private student loans. Currently, I still have around $3,000+ in Sallie Mae and College Avenue, combined. And as someone who is looking for ways to get that debt out of the way, news of student loan cancellation is always welcome.
So, I’ve been on a research spree on where we are at now with regards to student loan cancellation. And that is what this post is going to be about. I wanna lay out what I know about Biden’s student loan cancellation, and how my situation is affected by that.
Student loans have been a very big problem here in the US. So much so that it’s effectively called a crisis. More than 44 million student loan borrowers in the US collectively owe $1.7 trillion, where $1.5 trillion is made up of federal student loans. That is how big this issue is.
With the pandemic still ongoing, you can understand why more and more borrowers are calling for a wide-scale cancellation. It’s getting harder to make payments for a lot of those struggling to keep up with bills.
So, where are we now?
1. Biden & the $50,000 Question
The biggest and most recent news, I would say, regarding student loan cancellation is when Biden requested an inquiry to the U.S. Department of Education “to provide a recommendation on whether he has the legal authority to enact student loan cancellation unilaterally by executive order.“
Many of those in Congress has called for a $50,000 cancellation for student loans. However, Biden has never shown any support for that amount. For now, this question is still up in the air: Are we getting $10,000 or $50,000 in student loan cancellation?
2. Are we even getting one?
Aside from the amount in question, the most important question is: Are we even getting a loan cancellation anytime soon?
To be honest, the future of getting one is starting to get a little dimmer.
Biden’s administration is really focused right now with their Economic Plan. There’s that $2.3 trillion infrastructure plan and the recent $1.8 trillion families plan. None in those plans mention anything regarding student loan debt, so that’s a sign.
Is there another portion to that plan? I don’t know.
If we wanted wide-scale student loan cancellation, we should’ve gotten it already. Instead what we got is a targeted loan cancellation program. Since becoming president, Biden has already cancelled $2.3 billion in student loans.
First, he cancelled $1 billion for more than 72,000 borrowers. Then, he cancelled another $1.3 billion for another 41,000 borrowers with permanent and total disabilities. But keep in mind that $2.3 billion is only 0.1% of the $1.7 trillion problem.
Biden is obviously making a more targeted approach when it comes to cancellation. Americans have given mixed reactions to that, but for his administration, it seems to be working. So a targeted cancellation approach is more likely to be evident moving forward rather than a wide-scale one.
Another reason why we might not get cancellation is that student loan forbearance is nearing its expiration and we still haven’t received any news regarding it.
It’s almost as if Biden’s administration wants to let the expiration happen and get borrowers to get back into repayment. Whether this works or not is completely up for debate. People may not be ready to pay or systems may not be able to cope up with the sudden increase of transactions.
One last thing that I could think of as well is that the rollout of vaccines has decreased the odds of student loan cancellation. With the rollout of vaccines and the reopening of stores, jobs can be created and would stimulate the economy.
If that’s the case, then why cancel student loans when people now have the ability to pay for them? Biden has mentioned that his cancellation plan is tied to the ongoing pandemic. With deaths and cases dropping, the likelihood and support for cancellation will decline as well.
So in conclusion, getting student loan cancellation is starting to get a little blurry. The cases against getting one anytime soon is getting stronger as the pandemic slows down here in the US and politicians continue to not compromise on anything.