Joe Biden’s Plan for Student Loan Forgiveness

President Joe Biden campaigned on a platform that included ambitious changes for higher education as well as relief for student loan borrowers. On Biden’s first day in office, he extended the student loan payment pause through Sept. 30, 2021.

Other proposals will take longer. For example, Democrats are still wrangling over both the concept and the amount of student loan forgiveness. Progressives believe Biden can use his executive authority to cancel debt; the president has asked Congress to send him a bill. Progressives want forgiveness of as much as $50,000 for all federal borrowers; the administration has underlined $10,000 as its target.

The back and forth grabs headlines, but there is no legislation before Congress that includes forgiveness and no indication that Biden has changed his stance on executive action.

The moves so far:

  • Before the inauguration: Biden’s transition team said Biden would expedite a request to Congress for $10,000 in loan cancellation for all federal borrowers.
  • Feb. 4: Democratic lawmakers introduced a pair of resolutions in both houses of Congress reasserting a call made previously by Sens. Chuck Schumer and Elizabeth Warren for Biden to cancel $50,000 in student debt per borrower. White House Press Secretary Jen Psaki affirmed Biden’s support for some kind of cancellation but stopped short of promising action by executive order. “Our team is reviewing whether there are any steps he can take through executive action and he would welcome the opportunity to sign a bill sent to him by Congress,” Psaki responded via Twitter.
  • Feb. 16: Biden said during a CNN town hall that he would not forgive $50,000 through executive action. He said “I am prepared to write off the $10,000 debt but not $50 [thousand], because I don’t think I have the authority to do it.”
  • Feb. 19: A group of 17 state attorneys general called on Biden to forgive $50,000 in federal student loans per borrower through executive action, asserting he has the authority to do so under the Higher Education Act.
  • March 11: Biden signed the American Rescue Plan Act, which includes a provision that makes any student loan debt forgiveness tax-free from December 2020 through Dec. 31, 2025. Sen. Elizabeth Warren tweeted on March 6: “This clears the way for President Biden to #CancelStudentDebt without burdening student borrowers with thousands of dollars in unexpected taxes.”

Here’s more information on these and other proposals the Biden administration has set forth for higher education issues, including student debt forgiveness, free college and Pell Grants.

Remember: Biden’s platform proposals may or may not happen. Those that are passed could evolve significantly between now and then.

Broad student loan forgiveness

Biden officials, on Jan. 8, reiterated the president’s support for Congress to “immediately” cancel $10,000 of federal student loan debt per person as part of COVID-19 relief. That could wipe out debt completely for nearly 15 million borrowers who owe $10,000 or less, according to federal data. The majority of student loan borrowers (roughly 67%) have more than $10,000 in debt.

More opportunities to cancel debt

In addition, Biden has recommended canceling federal student debt in the following instances:

  • If you attended a public college or university. Attendees of private historically Black college and universities and additional minority-serving institutions would also be eligible.
  • If you used the loans for undergraduate tuition. Graduate student debt would not be canceled under Biden’s proposal.
  • If you earn less than $125,000. Biden’s plan references a phase-out of this benefit but does not offer further details.

These proposals would not affect borrowers with private student loans, but Biden does support making discharge of private student debt in bankruptcy easier.

Any broad student debt cancellation plan is likely to face extensive negotiation and headwinds in Congress.

Additional forgiveness for public service

Biden would introduce a new student loan forgiveness program for borrowers who provide public service.

  • Up to $50,000 would be forgiven. Under Biden’s plan, $10,000 of your debt would be automatically canceled for each year you perform eligible service, for up to five years total.
  • It wouldn’t replace Public Service Loan Forgiveness. That program, which is available to government workers, teachers and other nonprofit employees, requires borrowers to make 120 eligible payments to have their remaining balance forgiven.
  • Biden would rework PSLF. Biden proposes qualifying additional federal loans and repayment options for PSLF. Half your balance would also be forgiven after five years. Roughly 98% of PSLF applications have been rejected to date, according to Department of Education data.

Student loan forbearance

The current federal student loan forbearance began in March and was extended a second time on Dec. 4, 2020. It was set to end Jan. 31, but Biden immediately upon inauguration extended the pause through Sept. 30, 2021.

The administrative forbearance automatically pauses payments on most federal student loans and waives new interest on the loan balance. It also halts all collection activities on loans in default.

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