Here’s who won’t get student loan forgiveness.
Here’s what you need to know.
Student Loans
It seems that everyone these days has an opinion on wide-scale student loan forgiveness. If there is any wide-scale student loan forgiveness — which is a big maybe — it’s important to understand who qualifies for student loan forgiveness and who likely won’t get any student loan forgiveness. Let’s explore.
Not everyone will get student loan forgiveness
There seems to be a major misconception that every student loan borrower will get student loan forgiveness. Multiple progressive members have Congress have called for total student loan cancellation. It’s not uncommon to read tweets like “Cancel all student loans now” or “Biden must cancel all student loan debt.” For example, Sen. Bernie Sanders (I-VT) has proposed that all student loan debt, including both private and federal student loans, should be cancelled. However, there is no support in Congress or the White House to enact wide-scale student loan cancellation for every student loan borrower.
Private student loans won’t get student loan cancellation
If you have private student loans, don’t expect student loan cancellation from the federal government. Private student loans haven’t really been considered for student loan cancellation because the federal government doesn’t own private student loans. Rather, student loan borrowers borrow private student loans from private lenders. While the federal government conceivably could pay off individual private lenders and therefore cancel private student loans, it’s highly unlikely and administratively complex. Even the main proposal in Congress for wide-scale student loan cancellation would limit student loan forgiveness for federal student loan borrowers only.
Student loan borrowers who earn a high salary won’t get student loan cancellation
Student loan cancellation won’t be for student loan borrowers who earn a high salary. The corporate lawyer, doctor, dentist or MBA who earns $3oo,000 a year won’t get student loan cancellation. Again, not everyone will qualify for student loan forgiveness. The main proposal on wide-scale student loan forgiveness from Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) proposes to limit student loan forgiveness to federal student loan borrowers who earn up to $125,000 annually. If Congress passes any legislation on student loan forgiveness, that income cap could be lowered. The stimulus checks in response to the Covid-19 pandemic were targeted at individuals who earned up to $75,000 annually. It may be a hard sell to justify wide-scale student loan forgiveness at an income threshold that is higher than the income threshold for stimulus checks.
Who qualifies for student loan forgiveness right now
If you want to know who qualifies for student loan forgiveness right now, focus on which student loan borrowers have received student loan cancellation over the past year. President Joe Biden has cancelled $12.7 billion of student loans, which is the most of any president. Biden has focused on targeted student loan cancellation for specific student loan borrowers such as public servants, student loan borrowers with a permanent disability, and student loan borrowers who were misled by their college or university. These student loan borrowers can expect more student loan cancellation in the months to come. Who else may qualify for student loan forgiveness? If there is any wide-scale student loan forgiveness, it could be targeted at low income earners or student loan borrowers who are in student loan default or student loan deliquency. Rather than “wide-scale” in the traditional sense, this student loan cancellation could be targeted at those student loan borrowers who are most vulnerable financially in the wake of the Covid-19 pandemic.
Remember, there is no guarantee that there will be any wide-scale student loan cancellation. Plus, temporary student loan relief won’t last forever. That’s why it’s imperative to understand all your options for student loan repayment. Here are some popular ways to pay off student loans and save money:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment plans (lower payment)
- Public service loan forgiveness (student loan forgiveness)
Student Loans: Related Reading
Is student debt cancellation next?
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Biden extended student loan relief, but advocates really want student loan cancellation
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January 13, 2022 at 12:14AM
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Here's Who Won't Get Student Loan Forgiveness - Forbes
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