Student loan borrowers can’t breathe a sigh of relief—at least not yet. President Joe Biden supported paying off $10,000 of debt per borrower during his campaign, but it wasn’t included in his latest budget proposal.
Student loan cancellation noticeably absent from Biden’s budget proposalBY Sydney LakeMay 25, 2021, 02:50 pm
Biden’s exclusion came despite pressure from members of both the House and Senate, along with advocates for student debt relief. As of 2020, total student loan debt totaled a record $1.57 trillion.
“President Biden campaigned on a promise to cancel student debt and millions of Americans expect him to follow through with that promise,” says Cody Hounanian, director of programs at Student Debt Crisis, a nonprofit organization focused on ending student debt. “Not including debt cancellation in his budget proposal is a missed opportunity to use the weight of his office to push for this much-needed relief.”
Congressional leadership, namely Majority Leader Chuck Schumer, a Democrat from New York, and Sen. Elizabeth Warren, a Democrat from Massachusetts, have pushed Biden to cancel up to $50,000 in student loan debt for federal student loan borrowers. Their proposal would provide “a massive stimulus to our economy, help narrow the racial wealth gap, and lift this impossible burden off of tens of millions of families,” Sen. Warren said in a February statement. That same month, Biden responded to the $50,000 forgiveness per student proposal, saying “I will not make that happen.”
While disappointing for borrowers, it’s not surprising to all student loan experts that forgiveness isn’t in the cards quite yet. But it doesn’t mean that it’ll never happen.
“I’ve been saying all along that people shouldn’t pin their hopes on this student loan piece being a part of the budget at the moment,” says Bruce McClary, senior vice president of communications for the National Foundation for Credit Counseling (NFCC). “It doesn’t mean that all hope is lost, and that student loan forgiveness for those who are anticipating it won’t reappear as an item later in some way, shape, or form. Certainly the issue will be revisited.”
An open question remains for student loan forgiveness: whether or not Biden has the legal authority to cancel student loan debt through executive action. In early April, the president asked the Secretary of Education about the legality of student loan cancellations. That question is still under review.
While student debt cancellation still hangs in the balance, the 44.7 million federal student loan borrowers may continue to take advantage of the freeze on repayments through Sept. 30, 2021. Experts remain divided on whether borrowers should continue making payments during the freeze, but agree that many options are available—which span from establishing a rainy day fund to continuing regular payments. They, too, align on taking action now, instead of waiting for “something that may or may not happen later,” McClary says, referring to the possibility of student debt cancelation.
“Do all you can to keep your student loans on track in the moment, in hopes that maybe something else will materialize later that might involve more widespread student loan forgiveness,” he advises.
The White House will release the complete fiscal year 2022 budget request on May 27, according to reports.