President Joe Biden has the legal authority to cancel student loans for every federal student loan borrower, according to these attorneys general.
Here’s what you need to know — and what it means for your student loans.
Eight attorneys general — from New York, Hawaii, Illinois, Michigan, Minnesota, New Mexico, Puerto Rico, and Washington — call on Biden to “cancel federal student loan debt for each and every borrower.” In their letter to Biden, the attorneys general note:
- the president has the legal authority to enact wide-scale student loan cancellation for every federal student loan borrower under the Higher Education Act of 1964;
- student loan borrowers are burdened by significant student debt and a “systemically flawed repayment and forgiveness system”;
- the student loan payment pause is not enough student loan relief;
- student loan borrowers will still struggle after student loan payments restart; and
- student loan cancellation would be “one of the most impactful racial and economic justice initiatives in recent memory”;
Student loan forgiveness: more student loan relief is necessary
Led by Attorney General Letitia James (D-NY), the attorneys general commend Biden for considering student loan cancellation of up to $10,000 for student loan borrowers. (Biden is not canceling most student loan debt). However, they believe this plan for student loan forgiveness is insufficient. According to the letter: “Now is not the time for half measures, extensions or patchwork solutions. Now is the time for decisive action. We call upon your administration to immediately exercise its authority to cancel federal student loan debt for every borrower.” While the attorneys general demand immediate action, they don’t specify how much student loan debt Biden should cancel. (Biden also said he won’t cancel $50,000 of student loans). Rather, they focus on canceling student loans for every student loan borrower. This implies that the attorneys general disagree with Biden’s potential limitation of who could qualify for student loan forgiveness. (Student loan forgiveness: who could qualify under Biden’s plan). For example, Biden could limit wide-scale student loan cancellation to federal student loan borrowers with college student loans only. Biden also could impose an income threshold to further reduce which student loan borrowers are eligible. The attorneys general imply that Biden should cancel student loans for all borrowers, including lawyers and doctors. Under this approach, graduate school student loans would be included and there would be student loan cancellation for all borrowers, with no income limit.
Student loan cancellation is needed because the student loan payment pause is insufficient
The attorneys general don’t want another student loan payment pause. Rather, they ant Biden — who has canceled $17 billion of student loans — to enact wide-scale student loan cancellation for all federal borrowers. “Restarting federal student loan payments, rather than permanently forgiving them, will only make matters worse,” the attorneys general write. They cite the troubling income-driven repayment program, which has forgiven student loans for only 50 student loan borrowers in 20 years. (Student loan forgiveness: 5 key takeaways from major announcement). They also note their battles with for-profit schools and student loan servicers.
Biden has said he’s considering wide-scale student loan cancellation, but he hasn’t made a final decision. If Biden cancels student loans, he likely will limit student loan forgiveness. Currently, the Biden administration is considering an income threshold per borrower of $125,000, although that could change. The student loan payment pause ends on August 31, 2022. If your student loans don’t get canceled or you don’t qualify for any potential student loan cancellation, it’s imperative to have a game plan for student loan repayment. Here are some potential options to save money: