Beware of these 5 myths about student debt cancellation.
Here is what you need to know.
There is a lot of misinformation about student loan cancellation – who gets it, how much, and when. Make sure you know how to tell the truth from fiction. You don’t believe these 5 myths about student loan cancellation:
1. All student loans will be forgiven
fairy tale “Cancel student loans” means all student loans have been canceled, or all student loans will be forgiven.
- Senator Bernie Sanders (I-VT) proposed repealing all student loans, including $ 1.7 trillion in private and federal student loans.
- However, this idea has no major support from President Joe Biden or members of Congress.
- Not all student loans will be forgiven. For example, observe restrictions on income requirements, e.g.
- Senate Majority Choke Schumer (D-New) and Senator Elizabeth Warren (DMA) have proposed canceling student loans for student loans. Annual income up to $ 125,000. If they receive more than this, they will not be forgiven for any student loans as planned.
2. Your personal student loans will be canceled
fairy tale Biden or Congress will cancel your private student loan debt.
- Binden proposed canceling the $ 10,000 loan. Biden plans can only apply to federal student loans, not private student loans.
- Similarly, Schumer and Warren’s plan only applies to federal student loans.
- While private student loans may be canceled if there is a large student loan, the current sentiment is that only federal student loans will be canceled.
- In particular, the cancellation of student loans applies to federal student loans held by the US Department of Education. Therefore, this may include some FFELP and Perkins loans made by financial institutions or private investors.
3. Biden may cancel student loans by executive order
fairy tale Biden can unanimously approve student loan cancellation by executive order.
- Biden wants to cancel student loans in three ways.
- Despite comments from some members of Congress, approving a student loan cancellation is not easy.
- Biden has some power to forgive student loans in the executive branch. For example, in January, Biden canceled more than $ 2.3 billion in student loans.
- The US Constitution gives “the power of the wallet” to Congress, not the president, to control federal spending. The most common interpretation is that the president does not have the power of one party to cancel student loans without additional congressional approval.
- If the president cancels student loans, the decision could be challenged in court. This may delay any student loan forgiveness for borrowers.
- Biden called on the US Department of Education to review its authority to approve a broader student loan cancellation order.
4. Congress repeals student loans
fairy tale There is widespread support for student debt cancellation in Congress.
5. The only way to get a student loan waiver is to cancel a student loan
fairy tale If Biden does not cancel my student loan, I will never receive a student loan waiver.
- There are many ways to get a student loan waiver.
- While they may not happen right away, these existing programs can help you save money.
- Income-driven payment plans such as IBR, PAYE, RevAYE and ICR can help you get a student loan waiver for your federal student loans. After 20 years (undergraduate student loans) or after 25 years (postgraduate student loans).
- If you are struggling to repay student loans or lose your job, income-based return plans are very helpful.
- Until December 31, 2025, any student loan you receive through the income-based payment plan will be exempt from tax exemption. Congress can extend this provisional provision beyond this date.
- The Public Service Loans Forgiveness Program allows student loan borrowers to obtain a federal student loan waiver, in addition to other requirements, if they have worked full-time for a qualified public service or nonprofit employer and have a student loan.
- There are plans to cancel student loans for all government employees after 10 years of service, even if they do not meet the criteria for student loan waiver.
- Biden supports the Public Service Loans Forgiveness Program and proposes a $ 50,000 student loan waiver five years later.
Student Credit Cancellation – Next Steps
When it comes to student loan cancellation, there are many moving parts. Binden is reviewing the US Department of Education’s draft law to help teach the next steps regarding student debt cancellation. Although education secretary Miguel Cardona chooses a particular piece of advice, he considers both legal and policy considerations. If Biden cancels student loans by executive order, cancellation of student loans looks like this. If Biden does not have the legal authority to cancel student loans by executive order, then Congress must take action. Binden said he would sign any law on student loan forgiveness. To pass the law, however, Congress must amend the current theme for a $ 50,000 student loan waiver to find a more supportive solution.
If Biden or Congress decides to cancel student loans, do not expect all of your student loans to be canceled. That’s why it’s important to consider these other possible options to save money –
Student loan cancellation has suffered a major setback
Biden wants to cancel a student loan in 3 ways
If $ 50,000 student loan is forgiven, this will happen
Student loan forgiveness means cancellation for student loans