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Can President Joe Biden Forgive Student Loans?

UPDATE: President Biden announced that he is not—repeat not—planning to include student loan forgiveness in his annual White House budget. In line with several statements the president has made since taking office in January, he says he’s hoping for Congress to get some form of forgiveness done through legislation. And even though several key Democratic leaders in Congress have publicly pushed Biden to use an executive order to forgive a chunk of debt for borrowers nationwide, it’s still not clear if the president even has the legal authority to make such forgiveness happen. This issue continues to look like a political hot potato, where everyone wants the credit for the idea, but nobody wants the heat of handling the job itself.

Maybe Joe Biden can forgive student loans, and maybe he can’t, but one thing’s for sure: Waiting on somebody from the government to fix your money problems is no way to go through life.

Regardless of who is in the White House, the responsibility for taking control of your money is always entirely in your hands. Let’s see what Biden and other elected officials are actually saying about student loans—and how their proposals should influence your own budget.

Can the President or Other Government Officials Forgive Student Loans?

Politicians make a lot of promises, but those promises need a truckload or two of salt to be taken seriously. Even a legit idea like trying to help people who are struggling with student loan payments can’t go anywhere without agreement from both national parties’ lawmakers in Congress. And let’s say some kind of proposal to forgive student loans does become law—it would still be open to lawsuits if anyone thinks the new law is unconstitutional.

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Throughout the 2020 election season, several presidential candidates spoke about plans to forgive student loans. Biden was one, along with Sens. Bernie Sanders (I-VT) and Elizabeth Warren (D-MA).

Since November, Biden has upped the ante. He’s talked about writing an executive order or supporting a law that would cancel some amount of federal student loans. Biden supports up to $10,000 in forgiveness, and some Democrats are pushing for far more.1

But is student loan forgiveness within the president’s power, let alone something likely to happen once Biden enters the White House? Here are the recent happenings around forgiveness, and the legal facts on how it works:

  • Biden might be able to wipe out some amount of school debt for certain borrowers, the legal and political questions of using his pen to grant forgiveness are debatable.
  • Legal scholars are divided on which part of the government (if any) can cancel federal student loans.2 Experts have suggested everything from executive orders to executive agencies to get the forgiveness done, while some say Congress alone can make such actions stick. 3
  • The most recent high-profile case of a president forgiving student loans happened in 2019, when President Donald Trump used a memorandum to discharge the student loan debt of all totally and permanently disabled military veterans who had not yet taken advantage of an existing program through the Department of Education.4 (This basically cut out the red tape that was required in the past to get the loans discharged.)
  • Lawmakers in both houses of Congress this year have introduced legislation calling for various amounts of forgiveness during the ongoing COVID-19 pandemic. But in both cases support was mainly from members of Biden’s own Democratic party.5,6 Any such proposals would likely also need support from Republicans to become law.

The bottom line? These proposals are only that—proposals. And whether they become law or not, nobody should plan their financial future around promises made by politicians.

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What Has Biden Said About Student Loan Forgiveness?

As for Biden himself, he has mentioned forgiving $10,000 per borrower.7 He took that figure from a House bill passed earlier this year that was part of a $3.4 trillion coronavirus relief package.8 (The bill received no support in the Republican-controlled Senate.)

Asked for his thoughts about student loan forgiveness at a press conference in November, Biden said, “It does figure in my plan.”9 But he didn’t provide specifics about exactly how he would like to get the loan forgiveness done, whether by executive action or through an act of Congress. And in case you’ve forgotten, an act of Congress is sometimes slang for impossible.

We’ll say it again, ‘cause it can never be repeated too often: Don’t look to the government to solve your financial issues.

How Much Debt Forgiveness Is Being Proposed in the Senate Resolution?

Sure, Biden is saying 10 grand, but are there any bigger spenders in government hoping to “help” poor indebted citizens? You better believe it!

How does 50,000 smackeroos per borrower sound? If that much forgiveness happened, you might start hearing spontaneous debt-free screams all over America! But before you shift those student loan payments to something else in your budget, let’s see what these eager lawmakers are actually planning.

The proposal getting the most attention on social media has been a Senate resolution sponsored by Sens. Warren and Charles Schumer (D-NY). Once again, it’s related to helping borrowers hurt by the coronavirus pandemic. It calls on the president to use an executive action to cancel up to $50,000 in federal student loan debt for borrowers.10 Nice gift if you can get it! No wonder so many people are tweeting #cancelstudentloans!

But what exactly does “resolution” mean in this context? Well, it has about the same power as a New Year’s resolution—it’s a nice thought, but in itself it’s meaningless. A Senate resolution simply says the person or people who wrote it think it should be a law, but it doesn’t have any binding power.

A resolution’s sponsors have to wrangle enough of their fellow senators to get it passed into law. And even if that happens, then someone—usually the taxpayer—has to pay for it all.

With or without passage, the resolution could influence the president to follow through with an executive order that cancels $50,000 of debt per borrower, or some smaller amount. Or he could ignore it completely. But whatever Biden thinks of the resolution, the paper it’s printed on remains paper—and it doesn’t grant him any new ability to cancel student loan debt right now.

Here are a few other features of the Senate resolution:

  • It calls on the president to continue the pause on federal student loan payments for the entire duration of the COVID-19 pandemic.11 
  • It makes the claim that legal authority already exists for the secretary of education to cancel federal student loan debt.12 Based on that idea, the president could work with leaders in his own administration to stop collecting payment from federal borrowers. Other legal experts, though, have questioned the senators’ theory.13
  • Unlike some current forms of student loan forgiveness, the resolution proposes forgiving the loan amounts without charging any income tax.14

What Should You Do About Your Student Loans Today?

Wouldn’t it be nice if you could cancel all the bad things in your life? Sure! If we had a ban button available for all of life’s aches and pains, we’d be pressing it all day long. Here in reality though, there are no magic wands. And there are very few simple solutions that don’t cost someone money or effort—and often both!

So, how realistic is it to hope for some relief through student loan forgiveness?

Well, it’s not entirely outside the realm of possibility. But it’s also pretty unlikely. A controversial move like canceling student loans takes a lot more to pull off than PR and trending tweets.

Instead of waiting on somebody in Washington, D.C. to pay your student loans off for you, remember the Baby Steps:

  • Baby Step 1? As fast as you can, save up a $1,000 starter emergency fund.
  • If your income is stable and you’ve got that thousand-dollar cushion, take Baby Step 2: continue to pay your student loans each month wherever they fit in the debt snowball method. That means listing your debts smallest to largest, and paying minimum payments on everything but the little one. This helps you speed up progress on your debt, knocking each debt out and rolling older payments into the next largest until you’re completely debt-free!
  • The sooner you pay everything off, the sooner you can begin putting the same intensity into Baby Steps 3-6, which means saving more for emergencies and retirement, and eventually focusing on other long-term goals like saving for your kids’ college and paying off your house!

And if you want to really speed up your progress with those student loans, explore refinancing—if and only if it makes sense for you. You just might lock in a better fixed-interest rate and a shorter term to pay the loan off! The goal is always to leave debt behind forever! To find out if refinancing is a good option for you, check out the only refi partner we trust.

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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