President Joe Biden just cancelled $1 billion of student loans—and this is how America reacted.
Here’s what you need to know.
Student loan cancellation is here, and the the U.S. Department of Education just cancelled $1 billion of student loans for 72,000 student loan borrowers. These student loan borrowers previously had some student loans cancelled, but now will get full student loan cancellation if they attended a school that engaged in deceptive or illegal practices or closed suddenly.
What do people think about this major decision to cancel student loans? Here is a non-comprehensive, general cross-section of some of the feedback from across social media:
1. Biden cancels $1 billion of student loans — let’s celebrate
Many people on social media lauded the decision to cancel $1 billion of student loans, saying it was a significant step to address student loan cancellation. Student loan borrowers have been hoping for financial relief, and they say Biden delivered on his promise. Not only did Biden ensure student loan cancellation, but he did so in the first 100 days of his administration. Importantly, this student loan cancellation will be tax-free to the student loan borrowers. The new stimulus package makes student loan forgiveness tax-free through December 31, 2025.
2. Student loan cancellation — this is just the beginning
Congress may cancel student loans more than once. While some borrowers cheered the decision to cancel student loans, others framed this student loan cancellation as only the first step in a bigger process for student loan forgiveness. They view this announcement as a potential precursor to Biden cancelling student loans through executive order or Congress cancelling student loans through legislation. Whether the amount of student loan forgiveness is $10,000, $50,000 or another amount, this group views this student loan cancellation as only the beginning of a broader plan to fix student loans.
3. Student loan cancellation — this only help some borrowers
Another group of people on social media criticized Biden’s student loan cancellation. Why? While they recognized the magnitude of the headline number of $1 billion, they mentioned that the actual amount of student loan forgiveness paled in comparison to both the amount of outstanding student loan debt and the aggregate numbers of student loan borrowers. For example, the latest student loan debt statistics show that 45 million borrowers collectively owe $1.7 trillion of student loan debt. On a percentage basis, $1 billion of student loan forgiveness equates to 0.6% of all student loans outstanding. Similarly, 72,000 student loan borrowers benefits about 0.2% of all student loan borrowers. So, this group of people aren’t particularly impressed with this latest move for student loan cancellation.
4. Will my student loans get cancelled?
A fourth group of people are asking: “Will my student loans get cancelled?” Some of these student loan borrowers attended schools that closed, while others say their college defrauded them. If your school misled you or engaged in illegal deceptive practices, you may be able to get student loan forgiveness for some or all of your federal student loan debt. You can apply for student loan cancellation under borrower defense to student loan repayment forgiveness.
5. Biden cancels $1 billion of student loans, but taxpayers will pay
A final group of people on social media say that this student loan cancellation is an unfair wealth transfer that sticks taxpayers with the bill. They say that student loan cancellation isn’t free; it’s funded by taxpayers. Some social media users question why taxpayers must bail out student loan borrowers who made bad decisions to attend for profit colleges, for example. (One retort from several social media users: Congress has bailed out large corporations. Why not forgive student loans for individual borrowers in financial need?). Others ask why there should be wide-scale student loan forgiveness for some borrowers when millions of other borrowers duly paid off their student loans by making financial sacrifices and, in some cases, working multiple jobs. They say there are several reasons why student loans shouldn’t be cancelled and they don’t want taxpayers paying for student loan forgiveness when the vast majority of Americans either don’t have student loans or didn’t attend college.
Biden student loan forgiveness: what’s next?
This may not be the only student loan forgiveness that will happen during the Biden administration. Congress and the president are both considering wide-scale student loan forgiveness. Importantly, this $1 billion of student loan cancellation is different than the wide-scale student loan cancellation that potentially could impact millions of student loan borrowers. The borrowers impacted through this major student loan announcement are a select group of people who got partial student loan forgiveness, but Biden wants to make these borrowers whole through borrower defense to repayment and cancel the remainder of their federal student loans too. The debate to cancel student loans for more student loan borrowers will continue. Therefore, don’t expect wide-scale student loan cancellation now. However, don’t expect all 45 million borrowers to get student loan forgiveness or get all their student loans forgiven. It’s more likely that Congress will limit who qualifies, how much student loan forgiveness there will be, and when the student loan cancellation might come. If Congress, rather than the president, cancels student loans, progressives in Congress will need to deliver a student loan bill that moderate Democrats can support. Make sure you create your own student loan plan because there is no guarantee that your student loans will get cancelled. Here are some potential options to consider:
- Student loan refinancing (lower interest rate, lower monthly payment)
- Income-driven repayment plans (lower monthly payment for federal loans)
- Public service loan forgiveness (student loan forgiveness for federal loans)