Should Biden cancel your student loans if you’ve already paid them?
Should President Joe Biden cancel your student loans if you’ve already paid them?
Here’s what you need to know.
As Biden plans to enact large-scale student loan forgiveness, he could forgive $10,000 or more for student borrowers. This is good news for student borrowers, especially those who have struggled financially as a result of the Covid-19 pandemic. Large-scale student loan forgiveness would join the ranks of other types of student loan forgiveness. For example, there is the exemption of student loans for civil servants. There is also student loan forgiveness for total and permanent disability. Borrowers who have been misled by their college or university also have access to student loan forgiveness. Don’t forget about student loan forgiveness through income-contingent repayment. (Student Loan Forgiveness: 5 Key Takeaways from a Major Announcement). However, one type of student loan forgiveness is particularly lacking: student loan cancellation for borrowers who have already repaid their student loan. Will Biden consider student loan relief for these student borrowers?
Student Loan Relief for Former Student Borrowers
According to Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY), large-scale student loan forgiveness has multiple benefits, including:
- economic stimulation;
- reduce disparities;
- increase family formation and home ownership;
- helping borrowers save for retirement; and
- release the psychological and financial burden of crippling debt.
If you have student loans and qualify for student loan forgiveness, you may have access to these tangible benefits. (Student Loan Forgiveness: Who Might Qualify Under Biden’s Plan). However, former student borrowers who have repaid their student loans would be excluded from the one-time, large-scale student loan forgiveness. Should they also get student loan forgiveness? Practically, when their student loans no longer exist, should they receive compensation equal to the amount of any large-scale student loan forgiveness?
Why Former Borrowers Should Get Student Loan Forgiveness
There are several reasons why student borrowers should also benefit from a “student loan forgiveness”. These student borrowers should not be viewed as wealthier student borrowers who could afford a college education. For many, college was a financial struggle. Like many student borrowers today, former borrowers struggled to afford homes, held multiple jobs, and delayed major life decisions like marriage and having children. For others, they voluntarily borrowed their student loans and wanted to honor their financial commitment, even though they could not afford it. Yes, their student loans no longer exist. However, for student borrowers who have repaid student loans more recently, should the Biden administration consider providing student loan relief?
Why Former Borrowers Shouldn’t Get Student Loan Forgiveness
Critics argue that student loan forgiveness should focus on today’s student borrowers who are struggling financially. (4 reasons why your student loans may not be forgiven). They argue that former borrowers, despite their difficulties, have repaid their student loans and no longer need immediate student loan relief. Most laws are not retroactive. If Biden included former student loan borrowers in current student loan relief, critics say it would open the floodgates to several other types of retroactive financial relief. This could significantly increase the cost of canceling student loans. Rep. Alexandria Ocasio-Cortez (D-NY) encouraged everyone to support student loan forgiveness and avoid the scarcity mentality. Ocasio-Cortez notes, for example, that young people pay for health insurance for the elderly, transit riders pay for freeways, and apartment renters pay for first-time homebuyer credits. .
Will Biden cancel student loans from former student borrowers?
Biden has now canceled $17 billion in student loans. What does this mean for large-scale student loan cancellation? First, Biden is not canceling most student loan debt. Expect limitations on who is eligible. Second, Biden does not appear to be considering retroactive student loan forgiveness. Unless Biden changes his stance, former student borrowers may be out of luck. This includes student borrowers who repay their student loans one day before any large-scale student loan cancellations. It is important to note that if Biden is considering student loan forgiveness, there is no guarantee that he will carry out a full-scale student loan forgiveness. The end of temporary student loan relief from the Covid-19 pandemic is guaranteed, however. Currently, student loan repayments are due to resume beginning September 1, 2022. Make sure you know all of your student loan repayment options. Here are some popular ways student borrowers pay off their student loans and save money: