April 14, 2021

Student Loan Cancellation Could Forgive Student Loans For 36 Million People

Student Loan Cancellation Could Forgive Student Loans For 36 Million People


Student loan cancellation of $50,000 would forgive student loans for 36 million people.

Here’s what you need to know — and what it means for your student loans.

Student Loans

New data from the U.S. Department of Education shows the impact of student loan cancellation on student loan borrowers. Sen. Elizabeth Warren (D-MA) requested the data on student loan cancellation as part of her push to cancel up to $50,000 of student loans for eligible student loan borrowers. This includes Direct Loans and FFELP loans owned by the U.S. Department of Education, and coincided with Warren’s explosive hearing in Congress on student loans. Here are some key highlights:

How many student loan borrowers would get total student loan cancellation?

Congress and President Joe Biden are considering student loan cancellation. While they differ on the amount of student loan cancellation, they both support some form of wide-scale student loan forgiveness. Here is how many student loan borrowers would get complete student loan forgiveness based on the per borrower amount of student loan cancellation:

  • $10,000 of student loan cancellation: 15.0 million borrowers
  • $20,000 of student loan cancellation: 24.1 million borrowers
  • $30,000 of student loan cancellation: 30.0 million borrowers
  • $40,000 of student loan cancellation: 33.7 million borrowers
  • $50,000 of student loan cancellation: 36.1 million borrowers


How many student loan borrowers in student loan default would get complete student loan cancellation?

As of December 31, 2019, approximately 10.3 million student loan borrowers were in student loan default or 91+ days delinquent out of approximately 45 million student loan borrowers with student loans. Based on the amount of student loan forgiveness, here’s how many student loan borrowers would get complete student loan cancellation:

  • $10,000 of student loan cancellation: 4.7 million borrowers
  • $20,000 of student loan cancellation: 7.2 million borrowers
  • $30,000 of student loan cancellation: 8.5 million borrowers
  • $40,000 of student loan cancellation: 9.3 million borrowers
  • $50,000 of student loan cancellation: 9.8 million borrowers

How much money have student loan borrowers saved in student loan interest payments during the Covid-19 pandemic?

During the Covid-19 pandemic, mandatory federal student loan payments have been paused and there is no accrual of interest. As a result, student loan borrowers collectively have saved approximately $5 billion per month.


How long have student loan borrowers been paying off student loans?

Here’s a snapshot of how long borrowers have been paying off student loans, how many borrowers in each category, and how much student loan debt they owe:

  • In-School/Grace Period: 8.1 million borrowers and $252.4 billion
  • 2 – 5 years: 6.0 million borrowers and $163.9 billion
  • 5-10 years: 11.4 million borrowers and $387.1 billion
  • 10-20 years: 10.6 million borrowers and $457.6 billion
  • 20+ Years: 4.4 million borrowers and $211.4 billion

The largest concentration of student loan borrowers have been paying off student loans for 10 to 20 years. Strikingly, approximately 10% of student loan borrowers have been paying off student loans for more than 20 years and collectively owe $211 billion.


What this means for your student loans

What does this mean for your student loans? America already has reacted to Biden cancelling $2.3 billion of student loans since becoming president. The question is how much student loan cancellation, if any, comes next. Warren is trying to build the case that a higher amount of student loan cancellation per borrower will completely forgive student loans for more student loan borrowers. If Congress or Biden cancelled $50,000 of student loans per borrower, for example, 36 million borrowers would no longer have student loan debt. That headline is potentially exciting for many student loan borrowers. However, at this juncture, it’s only a data point. Ultimately, Biden or Congress would need to cancel student loans. Currently, Congress doesn’t appear to have enough votes to pass legislation on student loan cancellation. Biden doesn’t support cancelling student loans by executive order nor does he support cancelling student loan debt up to $50,000 per borrower. That said, Biden said he would sign legislation that Congress passes. Biden also has asked the U.S. Department of Education to conduct a legal review on his authority to enact student loan cancellation unilaterally by executive action without further congressional authorization. The final issue is that this data doesn’t include any adjustments for who would qualify for student loan cancellation. Not everyone is likely to qualify for student loan cancellation. For example, Warren’s proposal is to cancel federal student loans only for borrowers who earn up to $125,000 annually. Therefore, unless there are no requirements to get student loan cancellation (which doesn’t appear likely), then fewer student loan borrowers would get student loan cancellation than this student loan data suggests.

Importantly, there is no guarantee that your student loans get cancelled or that you will be eligible for student loan forgiveness. As you evaluate strategies for student loan repayment, here are some potential options to consider:


Student Loans: Related Reading

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America reacts to $1 billion of student loan cancellation

Why a 4th stimulus check is unlikely

Biden cancels $1 billion of student loans

$2,000 stimulus checks every month until Covid-19 is over?

Stimulus bill suggests this about student loan cancellation

Student loan relief for 1 million more borrowers—After $2.3 billion of student loan cancellation

Stimulus checks are coming soon, but student loan cancellation may take longer



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