August 3, 2021

Student Loan Forgiveness Should Include These 3 Things

Student Loan Forgiveness Should Include These 3 Things

If Congress cancels student loans, any plan for student loan cancellation should include these 3 things.

Here’s what you need to know.

Student Loans

Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) want you to get up to $50,000 of student loan cancellation. Currently, however, there is no clear path to cancelling $50,000 of student loans. President Joe Biden has said he won’t support this, and Congress won’t support it either. It’s possible that Congress passes student loan forgiveness of $10,000 or a smaller amount. However, that amount isn’t guaranteed either. So, where do we go from here? How does Congress move toward a bipartisan solution?

If Congress cancels student loans, here are 5 things Congress should consider:

1. Not everyone gets student loan cancellation

There have been broad calls to “cancel all student loans.” Sen. Bernie Sanders (I-VT) called for cancelling all $1.7 trillion of student loans, including all private and federal student loans. However, there are no serious proposals in Congress to cancel all student loan debt. If you’re hoping for all your student loans to be cancelled, please know that it’s very low probability. In addition to how much student loan forgiveness, Congress will need to target who qualifies for student loan forgiveness. Currently, Schumer and Warren want student loan cancellation for borrowers who have federal student loans and earn less than $125,000. Opponents of student loan cancellation don’t want student loan cancellation for everyone. Therefore, Congress will need to target any student loan forgiveness for borrowers who are financially struggling. This may include individuals who are unemployed or earn low income, for example. As Congress targets who would qualify, Congress will need to define what constitutes “low income.” That may amount may be $125,000, but it also could be a lower amount such as $75,000 or $50,000 or $30,000, for example. To reach bipartisan consensus, progressives may have to compromise on the targeting issue.

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