Student Loan Relief: 5 Ways Biden Can Deliver Student Loan Forgiveness - Forbes

President Joe Biden (Photo by Sean Rayford/Getty Images)
Here are 5 ways that President Joe Biden can deliver student loan forgiveness.
Here’s what you need to know — and what it means for your student loans.
It seems that everyone has an opinion on how Biden should cancel student loans. Now that Biden has canceled more than $17 billion of student loan debt, student loan borrowers are wondering whether Biden will enact wide-scale student loan cancellation next. Here are 5 ways that could cancel student loans.
First, Biden could deliver student loan forgiveness for all student loan borrowers. In this scenario, Biden could seek to cancel all federal and private student loans. If implemented, 45 million student loan borrowers would get $1.7 trillion of student loan forgiveness. Sen. Bernie Sanders (I-VT) has championed total student loan forgiveness.
Advantages: There would be no outstanding student loan debt. Student loan borrowers could achieve financial freedom and become debt-free. This could help student loan borrowers save for retirement, buy a home, start a family, launch a business and save for retirement. Wide-scale student loan forgiveness also could help reduce disparities.
Disadvantages: Total student loan cancellation of $1.7 trillion comes with a substantial price tag. There are administrative challenges to canceling private student loans, which aren’t owned by the federal government. Higher-income earners and student loan borrowers would benefit disproportionately.
Second, Biden could cancel up to $50,000 of student loan debt. Unlike total student loan forgiveness, Biden likely would focus on federal student loans only. Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) support this proposal. Based on their plan, only student loan borrowers with an annual income up to $125,000 would be eligible.
Advantages: If enacted, 36 million student loan borrowers would have 100% of their federal student loan debt eliminated.
Disadvantages: The total cost could be $1 trillion.
Third, Biden could cancel up to $10,000 of student debt for borrowers. (Biden will cancel student loans or extend student loan pause before August 31). In this scenario, Biden likely would focus on federal student loans only. Biden campaigned on $10,000 of student loan cancellation, which is significantly smaller than the Schumer-Warren proposal. Biden has repeatedly called on Congress to pass legislation to forgive $10,000 of student loan debt. If Congress votes to cancel student loan debt, Biden has said he will sign the bill into law.
Advantages: Biden delivers student loan relief to millions of student loan borrowers who are struggling financially. Despite popular belief, research shows that student loan borrowers with the lowest student loan balances often struggle financially more than student loan borrowers with higher student loan balances.
Disadvantages: The total cost could be approximately $370 billion. Student loan borrowers with higher student loan balances could get limited student loan relief.(Student loan forgiveness: 5 key takeaways from major announcement)
Fourth, Biden could limit student loan cancellation to student loan borrowers with lower income. The Biden administration would need to define “lower-income” and decide whether to include student loan borrowers in student loan delinquency or student loan default.
Advantages: This student loan cancellation would be more targeted student loan relief at a lower cost to the federal government. Biden could help student loan borrowers who are struggling financially and avoid criticism that higher-income earners are benefitting disproportionately.
Disadvantages: Student loan borrowers who don’t meet the income threshold could be struggling financially but wouldn’t get student loan relief. (Student loan cancellation could look different than you expect).
Fifth, Biden could continue targeted student loan relief. In this final scenario, Biden could decide not to enact any broad-based student loan cancellation. Instead, Biden could focus on student loan forgiveness for public servants, borrowers with a disability, or borrowers who were misled by their college or university under borrower defense to student loan forgiveness.
Advantages: Biden could limit the cost to the federal government while still delivering student loan relief to millions of student loan borrowers.
Disadvantages: Student loan borrowers who don’t qualify under these programs wouldn’t get any student loan cancellation.
There are additional considerations that the Biden administration must evaluate before implementing any wide-scale student loan forgiveness. First, there are additional benefits and risks to any plan for student loan forgiveness. Second, the Biden administration must determine that the president has the existing legal authority to enact wide-scale student loan cancellation. To date, Biden has said he doesn’t believe he has such authority. Even if Biden proceeded to enact wide-scale student loan cancellation, any implementation of student loan forgiveness could be delayed by legal challenges. Third, Biden will weigh the political advantages and disadvantages of canceling student debt, including either before or after the mid-term congressional election in November.
Student loan relief is scheduled to end on August 31, 2022. Are you prepared for the restart of student loan payment? Know all your options and choose the best student loan repayment strategy that works for your unique financial situation. Make sure to evaluate these popular options:

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