Student loan debt in the US is $ 1.71 trillion, placing it in second place in consumer debt after home mortgages. There have been calls from lawmakers to cancel some, if not all, debts. President Joe Biden included canceling $ 10,000 in loan debt per student as part of his election campaign, but some members of Congress want him to forgive $ 50,000 per student.
So far, Biden hasn’t forgiven any debt across the board, though $ 1 billion in student loans cheated by for-profit colleges has been forgiven. Here is the situation now when it comes to student loan forgiveness. We will continue to update this story as it develops.
What has happened to student loan debt so far?
During his presidential campaign, Biden called for forgiveness of $ 10,000 in federal student loans per person. He also imposed additional plans for students in the Biden Plan for Education Beyond High School, such as free tuition and more money for federal scholarships.
Shortly after taking office, Biden signed an executive order to extend the pause on student loan payments and interest until the end of September. Former President Donald Trump initially suspended payments at the start of the, and the suspension of the loan was extended two more times.
In, a provision removed any tax penalty if student loans are forgiven. The IRS treats debts forgiven for less than what is owed as taxable income. This would apply to both government loans and private loans. The forgiveness clause will last until December 25, 2025. As president, Biden has yet to formally forgive a student loan.
It is important to keep in mind that there is no movement in loan forgiveness as there are more and more scam artists claiming to help you forgive your loans.
Is Biden even authorized to forgive $ 50,000 in student loans?
At a CNN town hall in February, an audience member asked if Biden would forgive $ 50,000 in student loans.
“I’m willing to write off a debt of $ 10,000, but not $ 50,000,” said Biden. “Because I don’t think I have the authority to do it by signing the pen.”
It looks like Biden has changed his sentiment. On April 1, he asked Secretary of Education Miguel Cardona if it is within the powers of the president to forgive $ 50,000 in student loans. The department has not yet published its findings.
What could happen next?
Depending on the response of the education secretary, a number of things can happen. Biden may be able to sign an executive order that cancels one debt per student. Or Congress may have to pass a bill if sweeping cancellations are beyond Biden’s control. In either case, the amount ultimately canceled and any rules and exceptions regarding public and private debt would be controversial areas of negotiation.
Whatever the outcome, it is unlikely to happen anytime soon, although it is a topic that we are watching closely.