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2 paths to student loan forgiveness

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The cancellation of the student loan has of them paths.

Here’s what you need to know.

Student loans

There are two main ways to cancel a student loan. You can mix and match approaches, find another method, or even give it a different name. However, make no mistake: student loan forgiveness – if it happens – will likely happen in two ways. There are two battles brewing, and depending on who wins, this could shape the outcome of student loan forgiveness and have a lasting impact on your student loans. Here are the two battles:

Path #1: President Joe Biden (executive branch) against Senators Elizabeth Warren and Chuck Schumer (legislative branch).

Path #2: Warren and Schumer (legislature) versus moderate Democrats and Republicans (legislature).

Let’s explore.


Way 1: Biden enacts student loan cancellation by executive order

When you read tweets on Twitter or hear your friends say, “Biden can just cancel student loans,” they’re referring to the first path to student loan cancellation. If Biden cancels up to $50,000 in student loans, 36 million people would get a total cancellation of their student loan. However, it is not that simple. Beyond the political debate over the merits of large-scale student loan forgiveness, there are important legal considerations and rules that can determine whether your student loans are forgiven and by whom. In a nutshell, this path is a battle between Congress and the President. On this path, there is no debate about whether student loan forgiveness is a smart policy or will help millions of student borrowers. The parties already agree that canceling student loans is a good policy that will provide much-needed economic relief and save a generation from going deeper into debt. Biden as well as Warren and Schumer immediately support the cancellation of student loans. However, the parties differ on two main issues: first, how much student loan debt to cancelAnd two, who cancels student loans.

To his credit, Biden has already acted to forgive at least $2.3 billion in student loan debt since becoming president. America has already reacted in different ways to Biden’s cancellation of student loans. For example, Biden canceled $1 billion in student loans for 72,000 student borrowers. He also has canceled an additional $1.3 billion in student loans for 41,000 borrowers in total and permanent disability. That said, Warren and Schumer want Biden — not Congress — to immediately cancel up to $50,000 in student loans through an executive order. Citing the Higher Education Act of 1965, they say the president has full legal authority to decree the cancellation of student loans with the “click of a pen”. Biden disagrees and says he doesn’t believe he has the unilateral power to cancel student loans through an executive order. To “settle” this dispute, Biden asked the US Department of Education to rule on Biden’s legal authority to cancel student loans via executive order. However, there is a major problem.

Above all, Biden wants to cancel student loans in three ways. So, if large-scale student loan forgiveness doesn’t happen, there are still other ways Biden can help more student borrowers get their student loans forgiven.

Conclusion: It’s too early to tell what the Education Department will conclude or whether Biden will accept the recommendation. That said, if Biden proceeds with student loan cancellation, expect legal challenges, which could delay the implementation of student loan cancellation.


Path #2: Congress Cancels Student Loans Through Legislation

Warren and Schumer don’t want to talk about it, but Congress is unlikely to pass student loan cancellation. It may come as a surprise, but there doesn’t seem to be enough votes to pass large-scale student loan forgiveness. There are at least 16 US senators, including Warren and Schumer, who want to cancel their student loan up to $50,000. These 16 senators signed a resolution which calls on Biden to enact student loan cancellation by executive order. Warren, who has championed large-scale student loan forgiveness, held an explosive congressional hearing on student loans and student loan cancellation. During the hearing, Warren not only renewed its call to cancel student loans, but also said that Navient – one of the nation’s largest student loan managers – should be fired from the federal student loans department and that Navient CEO Jack Remondi should also be fired. Despite this hearing, it is not known whether moderate senators will join his movement. So far, Republicans don’t support student loan forgiveness, and few moderate Democrats have shown support for any student loan forgiveness, let alone $50,000. This is problematic because Democrats need all 50 Democrats to support student loan cancellation for the legislation to become law.

Conclusion: Congress would be the logical branch of government to cancel student loans. However, there do not appear to be enough votes to pass large-scale student loan forgiveness legislation. That leaves Democrats in a bind because it’s better to hope for executive order student loan forgiveness. However, this is far from guaranteed.


Student Loan Cancellation: Next Steps

Will you get a student loan forgiveness? Ideally, Warren and Schumer would like Congress to cancel student loans. Why? They can craft laws on their terms, including who is eligible for student loan forgiveness and how much is forgiven. Biden has previously indicated he will sign any student loan forgiveness legislation Congress sends him, including student loan cancellation up to $50,000. That, in itself, is positive for Democrats in Congress. However, Biden also knows that Congress is unlikely to pass such legislation. That’s why Warren and Schumer are urging Biden to act unilaterally, but it can be an uphill battle. First, Biden does not support the cancellation of student loans by executive order of any amount. Biden could change his mind following a legal review of student loan cancellation, but it has been clear where it stands. Second, it’s hard to argue – despite a literal reading of the Higher Education Act that proponents of student loan forgiveness cite – that Congress granted the executive unfettered power to cancel debt. student loan for each student borrower. It is rare for Congress to relinquish its powers completely and simply transfer them to the executive. Second, if Biden decides to cancel student loans, remember he will decide the scope and conditions of student loan cancellation. That means Biden, not Congress, could decide who is eligible for student loan forgiveness and how much student loan debt is forgiven. Ideally, Schumer and Warren would like Congress to control the terms of student loan forgiveness. However, it now appears their best hope is for Biden to accept the student loan forgiveness, but it will be on his terms — not them.

When evaluating your student loan repayment options, be sure to consider these potential options:


Student Loans: Related Reading

Biden wants student loan forgiveness 3 ways

If $50,000 in student loans are forgiven, here’s what happens

Cancellation of student loan could cancel student loans for 36 million

Student loan forgiveness means this for student loan forgiveness

America responds to $1 billion in student loan forgiveness

Why a 4th stimulus check is unlikely

Biden cancels $1 billion in student loans$2,000 stimulus checks every month until Covid-19 ends?

Stimulus checks are coming soon, but student loan forgiveness may take longer