Recently elected president, Joe Biden, plans to ask Congress to immediately enact a student loan forbearance action that cancels $10,000 of debt for borrowers and pause monthly payments further by advocating for an extension. This plan comes after the $900 billion pandemic aid package that was passed in December didn’t come with a payment pause extension for student loans. *The pause on federal student loan payments has been extended until October 1st, 2021.
In one survey, 6 out of 10 borrowers claimed that they are going to find it hard to pay their student loan payments in the months to come. Further data showed that approximately 90% of federal student loan borrowers have leveraged the option provided by the government to pause payments while the pandemic is ongoing. However, it is still not known how long Biden plans to extend the payment pause once in office.
The commitment by the president-elect to forgive $10,000 in student loans is in line with the promises he made during his presidential campaign. However, Biden is currently faced with growing pressure to cancel even more of the debt and to bypass Congress altogether.
But Forgiving Student Loan Debt Isn’t That Easy…
Chuck Schumer, the top Democrat of the Senate wants Biden to forgive $50,000 for each borrower by the first day of his presidency. Schumer states that Congress is no longer needed to take this action and all the president-elect has to do is affix their signature.
At the same time, Senator Elizabeth Warren, D-Mass, has recently mentioned that student loan forgiveness would be one of the most effective economic stimuli that could take place through executive action. However, not everyone agrees with this sentiment. Experts believe that Biden is going to face court challenges if he moves to cancel the debt without Congress’ approval. With Congress being mostly under Democrat control, it appears that the legislative approach may be a more suitable option. Even so, there is still a long road ahead for student loan reduction or elimination.
Despite the Democratic Party securing a couple of Senate seats in Georgia, they will still need Kamala Harris, the vice president-elect, to step in for them to get 51 votes over the 50 the Republicans hold. Even then, not all Democrats appear to agree with reducing or forgiving student loan debt. But even if they did, they’d need at least 60 votes to pass this act. Basically, it is going to be hard to convince nine Republicans to support Biden’s student loan forbearance.
Yet there is still a way to go about the rules. There is a yearly legislative process known as “budget reconciliation” that can let Democrats pass bills based on the voting majority. This was how the Democrats finalized the Affordable Care Act in 2010 and also how the Republicans approved the huge tax cuts in 2017.
Seeing as there is a lot of uncertainty in passing legislation that reduces or forgives student loans, advocates are urging Biden to just cancel the loans administratively. After all, borrowers can’t afford to delay any longer, especially with the ongoing coronavirus pandemic.
But until Biden’s student loan forgiveness plan is in place, payments are set to resume on October 1st, 2021.