The US President has voiced interest in canceling student loans up to $10,000 since assuming office, but the Democratic officials want to raise the cap to $50 000. A recent Change.org petition urges Biden to proceed even better by issuing an executive order canceling all federal student loans in 2021. About one million people have signed the survey for Biden student loan forgiveness.
Biden did repay $1 billion in debts to borrowers defrauded by colleges in March, but he has failed to propose a comprehensive roadmap for reducing student debt that is approximately $1.7 trillion.
In April, Biden questioned Education Secretary Miguel Cardona‘s legislative power to revoke student debt. The American Rescue Plan Act provided qualifying Americans with plus-up payments and a third stimulus check where appropriate, as well as more funds for unemployed adults, thousands of dollars for children with the new child tax credit, and enhancements in health care savings.
However, the bill makes no mention of students that are in debt. Here is the current state of affairs regarding student loan forgiveness. We will continue to update this story as new information becomes available. Additionally, you could be eligible for up to $50 000 Covid credits one-time. For further information about the current child tax credit, including who is qualified and how to measure the total, click here.
Where does Biden stand on student loan forgiveness at the moment?
During his presidential campaign, Biden advocated for a $10 000 per person Biden student loan forgiveness of federal student loan debt. Additionally, he outlined new proposals for college students in the Biden Plan for Education Beyond High School, including free tuition and increased funding for federal grants.
On March 22, 2020, Joe Biden stated that, as Senator Warren and colleagues have suggested, we can forgive a minimum of $10 000 in federal student loans per individual. Young people and other borrowers with student loans suffered the brunt of the previous recession and this must not happen again.
Biden issued an executive order shortly after taking office extending the moratorium on student loan fees and interest to the end of September. Former President Donald Trump halted payments at the start of the pandemic, and it was extended twice.
A clause of Biden’s American Rescue Plan eliminated any tax penalty associated with Biden student loan forgiveness. The IRS considers liability that is forgiven for less than the sum owing to be taxable income. This will be true with both public and private loans. The forgiving period is extended until December 25, 2025. However, Biden has yet to officially waive additional student loan debt as president.
Beware of scammers luring you for loan forgiveness
It’s critical to remember that whilst there has been no update towards loan repayment cancellation, there are a number of scammers pretending to be able to assist you with the forgiveness of student loans.
Can the President Waive $10,000 to $50,000 Dollars of Student Loan?
In February at a CNN town hall, an audience member inquired if Biden would forgive $50 000 in student loan debt.
Biden said that he is willing to forgive a $10 000 debt, however, not a $50 000 debt because he is not sure he has the right to do such a signing with a pen.
Is Biden reconsidering the $50,000 option?
However, it looks as if the president has reconsidered. On April 1, he questioned Education Secretary Miguel Cardona if the president has the authority to forgive $50 000 in student loan debt. The department has not yet made its conclusions public.
What is to be expected this year?
Several things may happen depending on the secretary of education’s response. Biden would be allowed to issue an executive order canceling a portion of each student’s debt. Alternatively, Congress could be required to enact a law if sweeping cancellations are outside Biden’s authority. In this scenario, the final balance canceled as well as the laws and exceptions pertaining to public and private debt will be controversial negotiating points. Whatever the result, it is unlikely to arise in the near future, but it is a subject we are closely monitoring.
Three student loan forgiveness programs that you might be eligible for
They are not, however, as easily accessible or as quickly received.
Public Service Loan Forgiveness is a federal government initiative that allows for the forgiveness of federal direct student loans whether the applicant works for the government or a nonprofit corporation and makes 120 eligible on-time payments under an income-driven repayment schedule This assumes that the government is expected to forgive the balance following ten years of payments. However, borrowers who think they qualify for forgiveness have faced trouble.
There were over 41,000 PSLF applications sent in 2019-only 206 were accepted by the Department of Education. Many were rejected due to irregularities, but a 2020 study by the nonprofit Student Borrower Protection Center showed that the Department of Education’s Office of Federal Student Aid mischaracterized employers that made borrowers disqualified. After the PSLF launched in 2007, the center reported that 98.8 percent of submissions had been denied.
Borrowers who take out loans to become teachers may qualify for partial forgiveness of their Perkins Stafford or Direct loans. The number varies depending on the topics taught in the schools where they study and how long they have been studying.
Finally, borrowers under an income-driven repayment schedule-under which monthly contributions may not exceed 10% of a borrower’s net income will have their outstanding debt balance forgiven after 20 years for undergraduates and 25 years for graduate students.
Keep yourself updated with us as we won’t let you be unaware of any development regarding Biden student loan forgiveness.