More and more student loans have been canceled, but that doesn’t mean student loan cancellation will happen anytime soon
More and more student loans are being canceled, but that doesn’t mean large-scale student loan cancellation is imminent.
Here’s what you need to know – and what it means for your student loans.
The late cancellation of student loans has been paradoxical in a way. On the one hand, President Joe Biden canceled $ 3 billion in student loans, while several colleges and universities canceled student debt. For example:
President Biden cancels student loans
- Biden canceled $ 1 billion in student loans for 72,000 student loan borrowers.
- Biden canceled an additional $ 1.3 billion in student loans for 41,000 totally and permanently disabled borrowers.
- Biden has provided student loan relief to 1.1 million student loan borrowers who defaulted on their FFELP loans.
- Biden wrote off $ 500 million in student loan debt for 18,000 student loan borrowers under the borrower’s defense against student loan repayment rule.
- Biden canceled $ 55.6 million in student loans for more than 1,800 students on the basis of the borrower’s defense to repayment, meaning Biden canceled $ 1.5 billion that way.
Colleges write off student debt
- Connecticut State Colleges and Universities (CSCU) has written off $ 17 million in student debt for 18,161 community college students due to the Covid-19 pandemic.
- South Carolina State University wrote off $ 9.8 million in student debt for 2,500 students.
- Dallas College forgives student loan debt for 14,000 students in the last year. The college in Dallas, Texas used funds from the College Emergency Fund, which is federal stimulus funds in response to the Covid-19 pandemic.
- Wilberforce University, the oldest historically black private university in the United States, has canceled all student debts and fines owed to the school for the classes of 2020 and 2021. This student loan forgiveness came about one day after Biden abandoned the student loan cancellation from the last federal budget.
- Delaware State University, a historically black public university, has written off up to $ 730,655 in student loan debt for more than 220 recent graduates who have faced financial hardship during the Covid-19 pandemic.
Student loan cancellation doesn’t have to happen anytime soon
In contrast, there hasn’t been a major update on large-scale student loan cancellation. The cancellation of the student loan from Biden as well as colleges and universities has been targeted student loan cancellation. This means that the student debt has been written off in whole or in part, but only for a specific group of students or student loan borrowers. Concretely, this targeted student loan cancellation is a completely separate process review of the general student loan exemption. Thus, student loan debt is forgiven, but it may not impact the implementation of a large-scale student loan cancellation. Some supporters of student loan cancellation claim that student loan cancellation is happening, although it is not widespread or happening as quickly as some student loan borrowers prefer. Biden not only canceled student loans, the Biden administration also held hearings on student loans, which could reshape the future of student loan repayment and student loan cancellation. Other supporters of student loan cancellation say the Biden administration did not go far enough to cancel student loans. For example, they note that $ 3 billion in student loan cancellations is only a fraction of the $ 1.7 trillion in outstanding student loan debt. These student loan borrowers – along with Senator Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) – want Biden to write off student loans through an executive order, which ‘they believe he currently has the legal authority to do so.
Has the student loan cancellation been canceled?
Has the student loan cancellation been canceled? For some student loan borrowers, it certainly looks like the student loan cancellation has been reversed. The US Department of Education is analyzing Biden’s legal power to unilaterally cancel student loans without further authorization from Congress. However, the Ministry of Education did not issue its legal recommendation. Even with a legal recommendation to cancel student loans, Biden would make any final decision on large-scale student loan cancellation. If Biden cancels student loans, student loan borrowers should expect legal challenges, which could delay any implementation of the student loan cancellation. The potential result: Student loan borrowers are left in limbo with no student loan relief. So, as more and more student loans are canceled, some student loan borrowers will get a substantial discount on their student loans. However, others may not get large-scale student loan cancellations soon.
If you have student loans, federal student loan payments are due again as of October 1, 2021. While Biden may extend student loan relief beyond that date, there is no guarantee. Even with an extension, you should have a clear strategy for paying off student loans. Here are some popular options for saving money: