Student loan forgiveness: US cancels $2B in debt — but what about relief for all borrowers?
Under President Joe Biden, the government has wiped out over $11.5 billion in student loans for select groups of borrowers.
Now the Education Department says a new round of relief is coming, with notices going out in the coming weeks for about $2 billion in federal loan forgiveness. Education Secretary Miguel Cardona tells borrowers to check their email inboxes.
You might not have realized you qualify for one of the debt cancellations granted to about 600,000 borrowers, who now have more ability to increase savings, invest money and deal with other debts.
But what happened to the idea that Biden supported to cut debt for every borrower? Lawmakers and activists who support erasing loan balances question what’s taking Biden so long to decide.
Student loans erased in waves
The Biden administration has made a series of announcements throughout the year as it eliminated student loan debt for one group of borrowers after another.
The latest came this week, when the education secretary announced on Twitter that the department included more than 30,000 borrowers, including veterans and military members, in the new round of debt cancellations. The government already told about 10,000 of those people about the relief, and emails will reach about 20,000 others over the next few weeks.
Other student loan debts canceled under Biden include:
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$1.74 billion for public service employees, including teachers, first responders, nurses and others.
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$7.1 billion for borrowers with “total and permanent disability.”
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$1.1 billion for people who attended ITT Technical Institute, accused of misleading students before it closed in 2016.
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$55.6 million for people who attended three other trade schools that misrepresented themselves to students, according to the administration.
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$1 billion for additional borrowers who accuse schools of defrauding them.
Meanwhile, the Biden administration is keeping all student loan repayment, interest and collections on hold through Jan. 31, 2022.
Tens of millions still want loan forgiveness
Let’s be real: The administration’s debt forgiveness to date is puny compared to the total $1.7 trillion in student loan debt carried by 45 million Americans.
During his presidential campaign, Biden said he would like to cancel $10,000 in federal student loan debt for every borrower.
High-profile Democrats in Congress, including Senate Majority Leader Chuck Schumer, have urged him to go bigger — and wipe out $50,000 per person.
Schumer says Congress is too divided to pass the idea in legislation and frequently argues that Biden has the executive power to enact broad forgiveness “with the flick of a pen.” House Speaker Nancy Pelosi has disagreed that the president has that power.
Biden’s administration said in April it would review whether he could take executive action but has said nothing about the matter since. Activists and some lawmakers are demanding that Biden hurry up.
They say reducing student debt loads would benefit the U.S. economy by freeing cash that people can put toward major expenses, such as homes and cars, new business ventures, and other big investments in their futures.
Tackle your debt while you wait for Washington
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Interest rates on student loan refinances through private lenders have been hitting all-time lows, and refinancing your student loan at a lower rate could chop down your monthly payments. If broad federal loan forgiveness ever does materialize, it won’t extend to refinance loans from private lenders.
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If you own a home, there’s still time to refinance that debt and save. The typical 30-year fixed mortgage rate is lower than it’s been in decades. But government officials are giving signs that rates like these won’t last long.
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If a student loan or mortgage refi has grabbed your attention, keep in mind that the best interest rates go to borrowers with the highest credit scores. It’s easy to check your credit score for free today, so get a peek to see if you need to do some work to prepare to reach out to lenders.
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Even if your budget’s stretched, you might squeeze a little extra income out of the rising stock market. A popular app helps you invest in a diversified portfolio using just your “spare change” from everyday purchases.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
