Biden's Student Loan Cancellation - Where Do We Stand And Where Are We Going?

Regardless of party alliance and political ideology, the prospect of having your student loan debt wiped clean was pretty enticing.  President Biden rode this promise heavy on the campaign trail. Prior to taking office Biden did well with Millenials and Gen Z, likely due to the prospect of forgiving student loan debt.  However, NPR reported in a May 1st, 2022 article that President Biden now has a problem amongst young voters. The article states that his support had plummeted 16 points among the aforementioned age generations.

The radical decrease in support can surely be attributed (at least in part) to the perceived lack of action as it pertains to student loan debt. Perception creates reality, and the reality is, that things are complicated.  If there’s been a lack of forgiveness or cancellation, at least there’s been a lack of payments.  All payments have been on pause since March of 2020. And while there hasn’t been a widespread cancellation of all student loan debt, $16 Billion has been forgiven.  So, why does it feel like nothing has actually happened? One reason might be because that $16 Billion figure, is only 1%(!!) of the total federal student loan debt.

Obviously, there are more urgent issues to solve in the world right now; but it’s still frustrating to see the promised student loan forgiveness, which is resting in an odd purgatory, largely ignored. Pressure is building as the President’s approval rating drops and millions of Americans are waiting with bated breath for an answer to what will happen to the remaining 99% of student loan debt? If all things go well, we won’t have to wait too much longer for some sort of resolution.  For context, here’s a timeline to see where we currently stand, how we got here, and what has been proposed thus far.

Campaign Promises:

Biden promised to cancel $10,000 of student loan debt for all borrowers. He explained additional incentives for low-income borrowers, student loan forgiveness for HBCU’s, how those earning more than $25,000 per year will pay no more than 5% of discretionary income toward payments, and plenty more. This is definitely worth a read, as the promises and plans are ambitious, to say the least.

Repayment Pause:

• Started in March 2020 with the CARES Act
  • Suspended all federal loan payments
  • Stopped accrual of interest on federal loans
  • Suspended involuntary collections of federal student loans
• Extended until 8/31/2022
• Further extension is possible

What Happens When The Pause Ends:

• Borrowers will be notified of the date their payments will resume
  • NOTE: Make sure all of your contact information is up to date and accurate
• Borrowers will have the opportunity to enroll in income-driven repayment plans

What Has Been Proposed:

The Washington Post reported on May 27th, 2022 that Biden’s latest plans called for limiting debt forgiveness to Americans who earned less than $150,000 in the previous year, or less than $300,000 for married couples filing jointly.  Those meeting the qualifications would see a $10,000 cancellation of their student loans.

This is just the latest rumor and things are continuously evolving and changing. It has been said that forgiveness would pertain only to loans for undergraduate tuition and that the loan forgiveness could be as high as $50,000. The details have changed but one thing remains clear: it is being discussed.  

Doing something and not doing enough, are not mutually exclusive. While yes, billions have been forgiven and we’ve been on a two-year pause, that is still not nearly enough. The whole situation feels like another case of overpromising and under-delivering. That is a true disappointment for so many who went in with a sense of hope and guarded optimism for something better.