Will Biden cancel student loans? Americans owe over $1.5 trillion in federal student loan debt, and President-elect Joe Biden has promised to cancel a substantial portion of it. But what exactly can he do on day one of his presidency? And can he really wipe out all of your debt with the stroke of a pen? Here’s what we know about how much student debt Biden could cancel as president and how quickly it might happen.
Will Biden Cancel Student Loans?
Despite what some have claimed, cancelling student debt isn’t possible without congressional action – at least for now.
Despite what some have claimed, cancelling student debt isn’t possible through executive order. The president can’t simply cancel student loans with an executive order. Even if he did, there’s no legal authority for the president to do so.
This is because the US government has already spent all of its money on other things (you’ve probably heard about this) and doesn’t have any left over to pay back your loans.
The only way student debt could be cancelled right now would be through congressional action – which is unlikely after 2020 when Democrats will lose control of both houses of Congress and most likely also lose their majority in one or both state legislatures as well (assuming they don’t change how electoral college votes are calculated).
Read also: How Do Students Apply For The Direct Stafford Loan Apex?
Some candidates have promised the ability to cancel student loans through executive order using existing legal authority, but that power is limited.
According to the Congressional Research Service, it is possible for a president to cancel student loans through executive order. So candidates have promised the ability to cancel student loans through executive order using existing legal authority, but that power is limited.
The only way that someone’s loan could be cancelled would be if they were granted a specific type of discharge under one of several sections of the Higher Education Act (HEA). One such section allows borrowers to apply for a discharge in certain circumstances related to their school’s closure or bankruptcy; another allows them to get a discharge if they were defrauded by their institution.
There is a way Biden could cancel student debts more broadly, but it would require a change in the law
But there is a way Biden could cancel student debts more broadly, and it involves using the same law that the Obama administration used to temporarily cancel some loans for veterans. Back in 2012, President Obama used the Defence to Repayment Act (DRA) to forgive $60 million worth of student loans for disabled veterans. The DRA allows federal agencies and departments to cancel or suspend repayment on certain debts if they’re deemed necessary for national security purposes.
The Biden campaign said that if he were elected president, he’d use the DRA again—but this time, he’d expand its reach beyond just military service members: “If elected president, former Vice President Joe Biden will use his authority under existing law (the Defense to Repayment Act) to help discharge all remaining eligible Direct Loans held by borrowers,” it said in a statement.
The Obama administration cancelled $7.7 billion in student loans by forgiving borrowers’ debts under the Defence to Repayment Act
The Obama administration cancelled $7.7 billion in student loans by forgiving borrowers’ debts under the Defence to Repayment Act.
The law was created in 2004 and allows for the cancellation of student loans if a borrower was unable to complete their studies due to military service, disability or death. It also covers students who were enrolled at an institution that closed before they could finish their degree program.
The act was used to cancel $7.7 billion in student loans, according to the Department of Education’s website. About 60,000 people are expected to have their debt forgiven as part of this initiative until 2023; however, there are no plans for additional debt cancellation after that date.
A Supreme Court case mandated that Congress must give Education Department officials explicit authority to broadly forgive student loans under a certain department rule, which would require legislation.
A Supreme Court case mandated that Congress must give Education Department officials explicit authority to broadly forgive student loans under a certain department rule, which would require legislation.
Biden may be able to cancel some student debt without further congressional action, but not all of it.
The Trump administration used this same rule to cancel $150 million in federal student loans for about 15,000 former Corinthian Colleges students as part of a settlement with state attorneys general.
The Trump administration used this same rule to cancel $150 million in federal student loans for about 15,000 former Corinthian Colleges students as part of a settlement with state attorneys general. The attorneys general sued Corinthian Colleges for misrepresenting job placement rates and other key aspects of its for-profit business model.
Under the Biden plan, eligible borrowers would be notified by the Education Department if their loans are being canceled or discharged, and they will have 120 days to appeal the decision.
Biden may be able to cancel some student debt without further congressional action, but not all of it.
You may be wondering how Biden will be able to cancel student debt and what he can do. Well, you may have heard that presidential candidates often propose new policies that affect the American people. But not all of these candidate proposals actually become law. To understand what Biden might do as president, we first need to discuss his current policy proposals and then look at whether or not he could enact them without congressional approval through executive order or through legislation.
Conclusion
Ultimately, Biden’s ability to cancel student debt will depend on support from Congress.
