Here’s what happens next if President Joe Biden cancels student loans.
Here’s what you need to know — and what that means for your student loans.
Any day now, Biden will announce his landmark decision on whether to enact large-scale student loan forgiveness. Biden could offer historic student loan relief to more than 40 million student borrowers who have waited years for their student loan forgiveness. If Biden proceeds with a large student loan forgiveness, here’s what could happen next.
1. Student loan forgiveness: Here’s what could be inside Biden’s plan
Leaked documents from the US Department of Education show a potential student loan forgiveness plan that could train Biden’s cadre. The plan includes $10,000 in student loan forgiveness, matching the amount of student loan forgiveness Biden has supported since running for president. Importantly, the White House says Biden has not decided whether to forgive student loans or whether he would consider canceling $10,000 in student loans. Progressive Democrats in Congress, like Sen. Elizabeth Warren (D-MA), are always renewing their efforts to get Biden to forgive $50,000 in student loans. Biden isn’t the only one with a student loan forgiveness plan. There’s also another successful plan to forgive student loans – here’s what’s inside.
2. Here’s who likes to qualify for student loan forgiveness
Here’s who might qualify for student loan forgiveness. Although eligibility could change, the leaked plan showed student loan forgiveness would include more than 40 million federal borrowers. This is a big win for student borrowers with FFELP and Perkins Loans, who have historically been excluded from historic student loan relief. The proposed plan for student loan forgiveness would also include Parent PLUS loans for parents who borrowed student loans for their dependent child and Grad PLUS loans for graduate students. Finally, large-scale student loan forgiveness could include an income threshold of $150,000 for individual borrowers and $250,000 for families.
3. Student Loan Forgiveness: When
If Biden enacts broad student loan debt forgiveness, many student borrowers wonder when their student loans will be forgiven. The Biden administration has not released official guidelines on when to cancel any student loans. However, internal U.S. Department of Education documents show some student borrowers could get student loan forgiveness as early as 45 days after Biden’s potential announcement. Other student borrowers might wait 90 days or more. This timeline assumes no legal challenges to potential student loan cancellation, which could delay implementation through an injunction, for example.
4. Here’s how to apply for student loan forgiveness
The Biden administration has not communicated a formal application process for obtaining large-scale student loan forgiveness. However, internal U.S. Department of Education documents indicate the application process could be streamlined for student loan forgiveness. For example, if the Biden administration includes an income threshold, Biden could automatically grant student loan forgiveness to student borrowers who previously provided their income to the US Department of Education. If the Department of Education does not have your income, you may be able to apply online and report your income yourself to determine if you qualify for student loan forgiveness.
Student loans: next steps
The student loan payment break ends in a few days. Biden has said he will decide on student loan forgiveness before the student loan payment break expires on August 31, 2022. If that happens, here are 4 things to expect with student loan forgiveness. Alternatively, Biden could decide not to enact large-scale student loan forgiveness. Student loan borrowers have received historic student loan relief, including no mandatory federal student loan repayments and 0% interest rates on student loans, since March 2020. If Biden enacts the large-scale student loan cancellation, expect student loan cancellation to be a one-time occurrence. That said, student borrowers should prepare now for the restart of student loan repayments starting September 1. Here are some of the best ways to save money on your student loans: