This story is developing.
Cancel $50,000 of student loans for every student loan borrower. Well, not exactly.
Here’s what you need to know.
Senate Minority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) want to cancel $50,000 of student loans for every student loan borrower. According to the latest student loan debt statistics, there are 45 million student loan borrowers who collectively owe more than $1.6 trillion in student loan debt. In September, Schumer and Warren introduced a resolution for the next president to cancel up to $50,000 in federal student loan debt through executive action.
According to Schumer and Warren, Congress has already granted the U.S. Secretary of Education the legal authority to broadly cancel student loans under Section 432(a) of the Higher Education Act of 1965, which grants the Secretary the authority to modify, “… compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.” However, many legal scholars believe that only Congress has the power to cancel student loans for every student loan borrower.
However, today, Schumer said that not every student loan borrower will qualify for student loan forgiveness. This is a major development in the ongoing call to cancel student loans because advocates for wide-scale student loan cancellation have been calling on Congress to cancel student loans for every student loan borrower.
During a press conference today, Schumer said that only student loan borrowers with an income less than $125,000 would qualify for student loan cancellation.
“This has a limit…if your income is above $125,000, it doesn’t affect you,” Schumer said when asked if student loan borrowers who are “well off” should have their student loans cancelled. “Thank you for asking that—I forgot to mention it. It only affects middle class and poorer students.”
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This appears to be a policy shift from what many in Congress have messaged previously, which was that every student borrower would get their student loans cancelled. The “$125,000 income threshold” matches the same income threshold that President-Elect Joe Biden has described in his plan for student loans on a variety of topics ranging from tuition-free college to student loan debt forgiveness due to the Covid-19 pandemic. Schumer also said that “lots of students paid off student loans, but it’s such a burden [that] it’s good for everybody, everybody to make sure this debt is vanquished. It has never been this high.”
Without an income cap, it’s possible that many wealthier student loan borrowers who can afford their student loan payments would receive the same amount of student loan forgiveness as lower income student loan borrowers who may be struggling financially, which raises issues of fairness (and total taxpayer cost).
Biden is “considering” cancelling student loans
Schumer also said today that he has discussed his plan to cancel up to $50,000 of student loan debt with Biden. Schumer said Biden is “considering” it and Schumer believes that after further researching student loan forgiveness, Schumer thinks Biden will support cancelling student loans. If Biden adopts this new proposal, however, it looks like not everyone may get student loan forgiveness.
Pay Off Student Loans
Will you qualify for student loan forgiveness? You may not if you earn more than $125,000 annually and this proposal becomes law. What’s the best way to pay off student loans? Here are 3 ways to pay off student loans, all of which have no fees: