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Can President Joe Biden Forgive Student Loans?

Another day, another whisper about whether or not President Biden can (or will) forgive student loans. And this issue still looks like a political hot potato—where everyone wants the credit for the idea but nobody wants the heat of handling the job itself.

Maybe Biden can forgive student loans. 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. And even though some targeted student loans have been canceled for specific groups of borrowers, that might not mean that the president can erase student loan debt across the board.

Let’s see what Biden and other elected officials are actually saying about student loans these days—and how their proposals could impact your own budget.

What Has Biden Done About Student Loan Debt Since He Became President?

It’s true—Biden hasn’t canceled the whole enchilada of student loan debt. But he has made some targeted forgiveness to specific borrowers since taking office. Let’s walk through it:

He Canceled Student Loan Debt Through Borrower Defense to Repayment 

If you’ve never heard of this before, you’re not alone. Borrower defense to repayment is a federal law that forgives students’ loans if they went to a school that did some shady stuff. And we’re not talking about the schools that hazed freshmen by making them be the purple horned frog mascot at pep rallies. We’re talking about schools that dabbled in illegal stuff.

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Overall, this type of targeted student loan forgiveness impacted nearly 92,000 borrowers to the tune of more the $1.5 billion.1

He Extended Student Loan Coronavirus Relief 

On his first day in office, President Biden extended student loan relief through September 2021.2 And as the fall months got closer, Biden decided to extend the pause on student loan interest and payments through January 2022.3 But those loans will hit again, and people will need to figure out their plan for paying them off.

He Canceled Student Loan Debt for Borrowers Who Have a Total and Permanent Disability 

In August 2021, Biden made some big headlines for canceling $5.8 billion in student loan debt for more than 323,000 borrowers with total and permanent disabilities.4 While that’s definitely a big deal for those borrowers, it’s not the whole picture.

See, these borrowers were already entitled to forgiveness under the Higher Education Act of 1965, but they had to get through a heck of a paperwork process to actually have their debt wiped out. Now, because of Biden’s “cancellation,” the Social Security Administration will find these borrowers so that their student loan debt can automatically be canceled—with no hoops to jump through to get approved.5

So, did Biden forgive $5.8 billion in student loans for borrowers with disabilities? Yes. Is there more to that headline than meets the eye? Yes.

But wait—there’s even more. Funny enough, this wasn’t the first time that Biden canceled loans for these specific borrowers. Back in March 2021, Biden wiped out $1.3 billion in federal loans for 41,000 people.6 These folks had gone through the messy paperwork and gotten their loans forgiven previously, but the loans came back—like zombies—just because the borrowers didn’t keep the right people in the loop about their income.7 The paperwork for this stuff is a mess, and that’s part of the problem the Biden administration wanted to take care of by automatically canceling their debt going forward.

He Didn’t Include Canceling Student Loan Debt in His Annual Budget 

After all the talk about canceling student loans (or at least a portion of them), President Biden did not—we repeat . . . did not—end up including student loan forgiveness in his annual White House budget.8 In line with several statements he’s made since taking office in January, the president says he’s hoping for Congress to get some form of forgiveness done through legislation. And even though a lot of big-name 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 do anything widespread like that.9

Can the President or Other Government Officials Forgive Student Loans as a Whole?

The jury is still out on this one. The media would love for you to think that the president is a wizard who can swoop in, wave a magic wand around, and give the people whatever they want. But it doesn’t work that way. In America, we have a system of checks and balances to keep everything on the up and up.

Biden himself has gone back and forth on what he thinks is in his power. In February 2021, he stood by his idea of writing off $10,000 in student loans, but didn’t think he had the authority to wipe out $50,000 (like some in Washington D.C. keep pushing for).10 But then in April 2021, he asked Education Secretary Miguel Cardona to research if the president has the ability to cancel student loans.11

Politicians make a lot of promises, but take those promises with a grain of salt here. Even a legit idea like trying to help people who are struggling with student loan payments can’t go anywhere unless both parties in Congress shake hands and agree on it. And let’s say some kind of proposal to forgive student loans does become law—it could still get hit with lawsuits if anyone thought the new law was unconstitutional.

But the big question is still unanswered here: Is student loan forgiveness within the president’s power. And is something likely to happen during Biden’s time in the White House? Here are the latest updates on student loan forgiveness, what’s happened so far, and the legal facts on how it works:

  • Biden might be able to wipe out some amount of school debt for certain borrowers, but the legal and political questions of using an executive order to grant forgiveness are up in the air.
  • Legal scholars are divided on which part of the government (if any) can cancel federal student loans. Experts have suggested things like executive orders to get the forgiveness done, while some say only Congress alone can make this stick.12
  • One of the high-profile cases of a president forgiving student loans happened in 2019, when President Donald Trump used a memorandum to discharge the student loan debt of all military veterans with a total and permanent disability who had not yet taken advantage of an existing program through the Department of Education.13 (This basically cut through the red tape that was required in the past to get the loans discharged.)
  • In 2020, lawmakers in both houses of Congress 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.14,15 This means these proposals would also need support from Republicans to become law.
  • Since March 2020, student loan interest has been paused and no payments have been due. Biden extended the deadline (for supposedly the last time), and payments and interest will start up again beginning January 31, 2022.16
  • Biden has forgiven a total of $8.7 billion of student loans through targeted measures.17

The bottom line? There’s been some movement here, but nobody should plan their financial future around promises made by politicians.

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What Has Biden Said About Student Loan Forgiveness?

Like we said earlier, Biden has mentioned forgiving $10,000 per borrower.18 And when running for President, Biden said that canceling student loan debt was a part of his plan. But he didn’t give details about exactly how he would like to get the loan forgiveness done—either 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, because 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 lately has been a Senate resolution sponsored by Sens. Elizabeth Warren and Chuck Schumer (D-NY). Once again, it’s related to helping borrowers who were 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.19 Nice gift if you can get it! No wonder so many people are tweeting #cancelstudentloans.

But what exactly does “resolution” mean here? Well, it has about the same power as a New Year’s resolution—it’s a nice thought, but without some action, it’s just empty words. A Senate resolution simply says that the people who wrote it think it should be a law, but it doesn’t actually 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. Great . . .

Whether it passes or not, this resolution could influence the president to follow through with an executive order that cancels $50,000 of debt (or some smaller amount) per borrower. But whatever Biden thinks of the resolution, the paper it’s printed on is still just plain ol’ 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 length of the COVID-19 pandemic (who know how long that is).20 
  • It makes the claim that legal authority is already there for the secretary of education to cancel federal student loan debt.21 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—so stay tuned.22
  • Unlike some forms of student loan forgiveness, as it stands now, the resolution talks about forgiving the loan amounts without any tax liability.23

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 delete 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 most solutions to life’s problems cost you money or effort—and sometimes both!

So, how realistic is it to hope for some relief through student loan forgiveness in one big, sweeping move?

Well, it’s not impossible. But it’s also pretty unlikely—aka don’t count on it. A controversial move like canceling student loans takes a lot more to pull off than just PR and trending tweets.

Look, it doesn’t matter who’s in the White House. The responsibility for taking control of your money is always in your hands. 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 $1,000 cushion, get going on 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 by knocking each debt out and rolling older payments into the next largest debt 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 through 6. These include building up your fully funded emergency fund and retirement nest egg, saving for your kids’ college, and eventually paying off your house!

And if you want to really speed up your progress with those student loans, take a look at refinancing—but 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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