Meet the heroes and villains of student loan cancellation.
Here’s what you need to know.
No matter which way you turn, someone has an opinion on student loan cancellation:
“Cancel everyone’s student loan debt.”
“He hasn’t cancelled enough student loan debt.”
“He cancelled too much student loan debt.”
“Why don’t we cancel everyone’s credit card debt and mortgage?”
“The president should cancel up to $50,000 of student loans.”
“Congress should cancel up to $10,000 of student loans.”
Whether you support or oppose wide-scale student loan forgiveness, there are certain heroes and villains who have emerged in this epic policy debate. Like any good season of Survivor, let’s meet the heroes and villains:
Here are a few of the notable heroes (this list is not comprehensive, so there are other heroes as well):
Biden has cancelled nearly $70 billion of student loans
Biden has cancelled more student loans than any president in history. This includes:
- $5.8 billion of student loans for student loan borrowers with a total and permanent disability;
- $1.3 billion in student loan cancellation for 41,000 student loan borrowers in March;
- more than $1.5 billion in student loans through the borrower defense to repayment process for nearly 92,000 student loan borrowers; and
- another $1.1 billion in student loans cancelled through borrower defense to repayment.
Biden’s student loan forgiveness means 3 things for your student loans. In total, Biden has cancelled nearly $9.8 billion of student loans. (Find out if you qualify for $9.8 billion of student loan cancellation). However, there’s more. By extending student loan relief twice as president through January 31, 2022, Biden will cancel another $60 billion of student loans. This bring the total student loan cancellation to $70 billion.
Senators Elizabeth Warren and Chuck Schumer want Biden to cancel your student loans
Student loan cancellation has become a focus on Capitol Hill. Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) have championed student loan forgiveness on behalf of student loan borrowers. Warren and Schumer are the public face of student loan forgiveness, and they have led a long fight on behalf of progressives in Congress and other stakeholders who support wide-scale student loan forgiveness. Their proposal is simple: Biden, as president, should issue an executive order to cancel up to $50,000 for student loan borrowers. They say student loan debt cancellation will give student loan borrowers a fresh financial start, which would enable them to get married, start a family, buy a home, save for retirement or launch a new business. That said, their plan to cancel student loan debt wouldn’t be available to every student loan borrower. Rather, Warren and Schumer support student loan cancellation only for federal student loan borrowers who earn up to $125,000 annually.
President Donald Trump extended student loan relief twice
President Donald Trump was president during the Covid-19 pandemic, and Trump extended student loan relief twice. This helped millions of student loan borrowers in the wake of Covid-19 and provided essential financial relief once student loan relief from the Cares Act — the $2.2 trillion stimulus package — expired. Trump extended student loan relief from October 1, 2020 through December 31, 2020 and again through January 31, 2021. While Trump left office on January 20, 2021, Trump may have extended student loan relief again, resulting in more help to student loan borrowers. Based on $5 billion a month in savings, per the U.S. Department of Education, Trump cancelled approximately $20 billion of student loans for student loan borrowers. Trump campaigned on simplifying student loan repayment and proposed a plan to cancel student loans for undergraduate student loan borrowers after 15 years (compared to 20 years under current income-driven repayment plans). Trump also ensured that federal student loan cancellation for veterans with severe diabilities would become automatic.
Secretary Miguel Cardona wants to help improve your student loans
U.S. Secretary of Education Miguel Cardona has been Biden’s partner in enacting student loan cancellation. As Education Secretary, Cardona has helped push for targeted student loan cancellation totalling approximately $10 billion. This includes student loan cancellation for borrowers with a total and permanent disability as well as borrowers who were misled by their college or university and sought student loan forgiveness under the borrower defense to repayment rule. Cardona, along with Federal Student Aid Chief Operating Officer Richard Cordray and others at the Education Department, want student loan borrowers to get a fair shake. Among other efforts, they are working to improve income-driven repayment plans, hold student loan servicers accountable, improve public service loan forgiveness, and make student loan forgiveness more accessible to student loan borrowers.
Congress passed a stimulus package that provided massive student loan relief
A bipartisan Congress, led then by Senate Majority Leader Mitch McConnell (R-KY), passed the Cares Act, a $2.2 trillion stimulus package, that provided unprecedented student loan relief for millions of Americans. Trump signed the Cares Act into law in March 2020. Among other benefits, the Cares Act provided:
- no mandatory federal student loan payments;
- 0% interest rates on federal student loans; and
- no collection of student loan debt in default.
This temporary student loan relief has helped millions of Americans during the Covid-19 pandemic. In aggregate, according to estimates from the U.S. Department of Education, will result in more than $110 billion of student loan cancellation. This student loan relief will expire in January 31, 2022 following four extensions from Trump and Biden. One of the hidden benefits of this legislation was the ability for student loan borrowers to “count” their non-payments toward meeting the requirements of income-driven repayments and the Public Service Loan Forgiveness program, both of which can result in student loan forgiveness for federal student loans.
Here are a few of the notable villains (this list is not comprehensive, so there are other villains as well):
Betsy DeVos championed balancing the interests of student loan borrowers and others
Former U.S. Secretary of Education Betsy DeVos says she sought to balance the interests of student loan borrowers and non-student loan borrowers to create fair public policy. She sought to clean up an education system that she viewed as broken and unaccountable. Many student loan borrowers and advocates labeled DeVos as a villain for her opposition to wide-scale student loan forgiveness and public service loan forgiveness. Student loan borrowers also criticized DeVos for low approval rates in the Public Service Loan Forgiveness program, which at times, hovered at 1-2%. That said, DeVos believed her actions to limit the borrower defense to repayment helped reduce federal spending. She also helped create more transparency through updates such as the Public Service Loan Forgiveness Help Tool as well as extensive data on colleges and student loan debt.
Student loan servicers continued to be criticized for misleading student loan borrowers
Student loan servicers continued to be vilified during the Covid-19 pandemic. For example, a new report alleges that most Navient student loan borrowers who paid student loans during the Covid-19 pandemic are “underwater” with their student loans. Student loan servicers have been blamed for misleading student loan borrowers, enrolling them in incorrect student loan repayment programs, misapplying student loan payments, adversely impacting credit reports and a host of other issues. Warren has said student loan relief should be extended beyond January 31, 2022 because student loan servicers aren’t prepared for student loan borrowers to make student loan payments. More recently, two major student loan servicers announced they aren’t renewing their contracts with the U.S. Department of Education, which may result in 10 million student loan borrowers being impacted until new servicers are identified. (Learn here if you’re on the 10 million student loan borrowers).
Student loan forgiveness: final thoughts
Student loan forgiveness has its avid supporters and opponents. It’s possible that you believe some who are on the heroes list should be moved to the villains list, and vice-versa. For example, some say Biden hasn’t cancelled enough student loans and has only championed targeted student loan cancellation. Others such as Speaker of the House Nancy Pelosi (D-CA) say Warren and Schumer are wrong to claim that the president can cancel student loans, even if they claim that a president has unilateral authority under the Higher Education Act of 1965. Still others claim that Republicans in Congress are the chief roadblocks to wide-scale student loan cancellation, even if there are many Democrats in Congress who oppose wide-scale student loan cancellation too. Finally, not all student loan servicers are bad and it would be unfair to criticize DeVos for every policy decision during her tenure. The bottom line is that the fight for student loan cancellation will continue, but the fight may not have a clear direction or definitive outcome. Plus, the next steps for student loan cancellation may be more than Biden’s legal ability to cancel student loan debt.
Student loan cancellation isn’t over. It’s possible that more heroes and villains will emerge in the coming months and years. That said, student loan relief is expiring, and there is no clear path to wide-scale student loan cancellation. This means you should prepare now for student loan repayment. Understand all your options, so you can make an informed choice. Here are some popular ways to save money with your student loans: