These 328 organizations want President-elect Joe Biden to cancel student loans now.
Here’s what you need to know.
In a letter to Biden and Vice President-elect Kamala Harris, these organizations urged Biden to cancel student loans on the first day of his presidency, January 20, 2021. Stakeholders include community, civil rights, climate, health and consumers, workers and student organizations. According to the letter, canceling student loans will “boost the economy, combat racial differences and provide much-needed boost to help all Americans weather the pandemic and its associated recession.” These groups do not want Congress to decide who will receive student loans; They want Biden to cancel the student loans by regulation.
Here are some highlights from the letter:
1. Cancel student loan by disposition
- The Higher Education Act of 1965 gives the US Secretary of Education the power to administratively cancel student loans.
- Senator Elizabeth Warren (D-MA) and Senate Minority Leader Chuck Schumer (D-NY) say Biden should waive up to $ 50,000 on student loans [for each borrower who earns less than $125,000 per year].
- Biden wants Congress to cancel the student loans immediately.
- Debt relief for student loans through executive action can help address “racial differences, economic recovery and Covid-19 aid”.
Analysis: While the Higher Education Act gives the Minister of Education the power to cancel student loans, it is not generally accepted that the same law provides unilateral powers to cancel student loans for every borrower. The Department of Education released a memo stating that it is illegal for Biden to cancel student loans through an order. Biden wants to cancel student loans in three ways, but ordinance is not one of them.
2. Termination of the student loan creates a boom
- The Covid-19 pandemic could leave student loan borrowers with a “scarred” effect, which could lead to “permanently lower employment and income levels”.
- Young adults with college degrees have an average net worth of $ -1,900.
- 37% of seniors with student loans are in arrears.
- Cancellation of the student loan can improve borrowers’ ability to pay off student loan debts, improve geographic mobility, and find better job opportunities.
- Cancellation of student loans would also increase GDP, create jobs and reduce unemployment.
Analysis: Congress could cut student loans in the new stimulus package. While Biden didn’t include student loan termination in its new $ 1.9 trillion stimulus package, Congress could include student loan termination or pass standalone legislation. To date, however, Congress has given $ 2,000 economic checks and unemployment insurance priority over student loan issuance in the new stimulus package.
3. Cancellation of student loans would reduce inequality and improve health outcomes
- “The disproportionate impact of student debt on colored borrowers exacerbates existing systemic inequalities and widens the racial wealth gap. “
- Cancellation of student loans has the “potential to increase the net worth of black households and could even help narrow the racial wealth gap”.
- Cancellation of the student loan can also improve health outcomes.
- For example, debt relief can reduce stress, depression, obesity, and mortality.
This will help you pay off student loans faster
How can you best pay off student loans? Biden would like student loans to be canceled but says student loans are unlikely to be canceled by an order. As a former U.S. Senator, Biden likely believes that only Congress has the power to cancel student loans on a large scale. To date, while some congressmen have proposed student loan waivers, student loans have been removed from the stimulus package. Even with that letter, there is no guarantee that Biden will cancel a $ 10,000 student loan – on January 20, 2021, or at all. Because of this, it is important to understand your student loan repayment options now. Start with these three options, all of which have no fees: