Why $50,000 Of Student Loan Cancellation Could Still Happen
Could President Joe Biden still cancel $50,000 of student loan debt?
Here’s what you need to know — and what it means for your student loans.
While Biden has focused on $10,000 of wide-scale student loan cancellation, the White House has said that no decision has been made on student loan forgiveness. There was even hope that Biden could announce a plan to cancel student loans on Saturday. Biden not canceling student loan debt yet is potentially good news for student loan borrowers and advocates who are hoping that Biden will cancel more student loan debt. Here are 5 reasons that Biden could still cancel $50,000 of student loans.
1. Biden hasn’t announced any plans on wide-scale student loan cancellation
There’s plenty of speculation on whether Biden will enact broad student loan forgiveness. However, Biden hasn’t formally declared that he will cancel student loan debt. Without a definitive plan to cancel $10,000 of student loans, Biden could be considering any amount of student loan relief. Simply put, no announcement on student loan cancellation means that $50,000 of student loan forgiveness could still be on the table.
2. Progressive Democrats are still pressuring Biden to cancel $50,000 of student loans
Progressive Democrats in Congress such as Sen. Elizabeth Warren (D-MA), Senate Majority Leader Chuck Schumer (D-NY) and Sen. Raphael Warnock (D-GA) are still pressuring Biden to cancel up to $50,000 of student loans. Warren and Schumer proposed legislation that would cancel up to $50,000 of student loans for federal student loan borrowers who earn up to $125,000 in annual income. They have asked the president to hold off on any student loan cancellation until they can meet with him to discuss the merits of more student loan cancellation. They say wide-scale student loan forgiveness will help student loan borrowers have more money to get married, start a family, buy a home, save for retirement or start a business. If Biden cancels up to $50,000 of student loan debt, 36 million federal student loan borrowers would get total student loan forgiveness. For Biden’s part, he has canceled more than $17 billion of student loans since becoming president.
3. Student loan cancellation of $10,000 isn’t enough, according to the NAACP
While Biden has championed $10,000 of student loan cancellation, NAACP President Derrick Johnson has criticized that plan as wholly insufficient. “[C]ancelling $10,000 in student loan debt is like pouring a bucket of ice water on a forest fire,” Johnson tweeted at Biden. According to Johnson, African-Americans are “the only people who have student debt higher than their median annual income.” Even with $10,000 of student loan cancellation, their student loan debt would still be higher than their annual income. Among other arguments, Johnson notes that African-American student loan borrowers “have nearly $53,000 in student loan debt four years after graduation—almost twice as much as their white counterparts.” Biden could consider more student loan cancellation to help reduce disparities.
4. $50,000 of student loan cancellation could help boost the economy
It’s no secret that the economy is struggling. There’s significant inflation. The stock market has been hammered. Layoffs have started. Biden could increase the amount of student loan cancellation to help student loan borrowers weather the economic storm. Advocates of student loan cancellation say student loan forgiveness will stimulate the economy. If Biden cancels $50,000 of student loan debt, it could also help financially vulnerable student loan borrowers who want a fresh start on their student loans or who are more prone to enter student loan default when student loan payments restart.
5. Biden could cancel $50,000 of student loan debt to help Democrats win the midterm election
Student loan forgiveness isn’t only about public policy. The biggest election of Biden’s presidency is on November 8, 2022. Democrats face an uphill battle to retain control of Congress. If Republicans win the House, Senate, or both, Biden’s legislative agenda will stall. Plus, Rep. Alexandria Ocasio-Cortez (D-NY) has warned the president that not canceling up to $50,000 of student loan debt could hurt Democrats for the midterm election. Why? Ocasio-Cortez says it could discourage student loan borrowers from voting for Democrats, and low voter turnout could lead to a Republican victory. So, Biden has to make an important calculus not only about whether to cancel student loans but how much student loan debt forgiveness there should be.
Importantly, Biden has said he’s not considering $50,000 of student loan cancellation. He’s never supported this amount of student loan forgiveness, and proceeding with this amount could cost $1 trillion. To date, Biden hasn’t wavered from $10,000 of student loan forgiveness. That said, a confluence of factors could influence Biden to reconsider $50,000 of student debt cancellation, or at least choose a higher amount than $10,000. Student loan relief from Covid-19 ends on August 31, 2022. Whether Biden cancels $10,000 or $50,000 of student debt, you’ll still need a plan to pay off student loans. Here are some smart ways to get out of debt faster:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)