{"id":2850,"date":"2022-07-25T14:18:18","date_gmt":"2022-07-25T18:18:18","guid":{"rendered":"https:\/\/www.skypointfcu.com\/wph\/workarea\/?p=2850"},"modified":"2022-07-25T14:34:53","modified_gmt":"2022-07-25T18:34:53","slug":"will-this-be-the-summer-of-student-debt-cancellation","status":"publish","type":"post","link":"https:\/\/www.skypointfcu.com\/wph\/workarea\/blog\/will-this-be-the-summer-of-student-debt-cancellation\/","title":{"rendered":"Will This Be the Summer of Student Debt Cancellation?"},"content":{"rendered":"\n

The \u201cwill he, won\u2019t he\u201d summer of student debt cancellation<\/a> is upon us.<\/p>\n\n\n\n

The \u201che\u201d is, of course, President Joe Biden.<\/p>\n\n\n\n

Some 43 million borrowers are hanging onto hope that Biden will take executive action to relieve at least some of their collective $1.7 trillion debt.<\/p>\n\n\n\n

Rumors fly on social media. The Department of Education says it will be ready whenever a cancellation happens. And the White House has been leaking potential details to the press.<\/p>\n\n\n\n

\u201cIt comes up all day, every day from borrowers,\u201d says Betsy Mayotte, president and founder of The Institute of Student Loan Advisors, a nonprofit. \u201cThey\u2019re getting frustrated about the messaging.\u201d<\/p>\n\n\n\n

So what is Biden waiting for?<\/p>\n\n\n\n

What\u2019s happened so far<\/strong><\/p>\n\n\n\n

President Biden campaigned on the promise of student debt relief, but his commitment to delivering it wavered once he took office.<\/p>\n\n\n\n

Biden at first asked Congress to send him student debt relief legislation \u2014 rather than acting on his own \u2014 despite the unlikelihood of such a proposal passing with a slim Democratic majority. But, in doing so, he raised questions concerning his legal authority to take executive action to cancel the debt. In addition, he said he would not support canceling debt for borrowers with an Ivy League education.<\/p>\n\n\n\n

It seemed as if debt cancellation might remain a pipe dream of borrowers and activists.<\/p>\n\n\n\n

But in recent months, Biden\u2019s prior public resistance to canceling student debt through executive order has softened. Most hints from the White House lately have been about the timing and logistics rather than the legal mechanism.<\/p>\n\n\n\n

So, will he? Most observers say yes. The real questions now are when, how much, and how many will benefit?<\/p>\n\n\n\n

When?<\/strong><\/p>\n\n\n\n

Signs show borrowers could see a cancellation announcement as early as this summer.<\/p>\n\n\n\n

Persis Yu, policy director and managing counsel at Student Borrower Protection Center, a nonprofit advocacy organization, says she thinks an announcement is likely before the federal payment pause ends after Aug. 31.<\/p>\n\n\n\n

\u201cWe need to see some action before that happens so that we don\u2019t have borrowers making payments on loans they don\u2019t owe anymore,\u201d says Yu. \u201cHopefully the White House is taking the time to make sure they\u2019re getting it right.\u201d<\/p>\n\n\n\n

The White House is clearly in no hurry.<\/p>\n\n\n\n

On April 28, Biden told reporters he would have an answer on student debt cancellation \u201cin a couple of weeks.\u201d On May 3, Jen Psaki, former White House press secretary, said Biden was considering tying relief to a borrower\u2019s income level. It seemed an announcement was imminent.<\/p>\n\n\n\n

Then nothing happened.<\/p>\n\n\n\n

The Washington Post reported on May 27 that Biden had hoped to announce cancellation during the University of Delaware commencement the following day but opted not to in light of the shooting at an elementary school in Uvalde, Texas, earlier that week.<\/p>\n\n\n\n

By June 6, a White House leak to The Wall Street Journal pushed expectations to July or August. That would put an announcement closer to the anticipated restart of federal student loans on Sept. 1.<\/p>\n\n\n\n

How much?<\/strong><\/p>\n\n\n\n

While campaigning in 2020, Biden promised to forgive $10,000 in federal student loans. Once he became president, the $10,000 number stuck, despite calls from some Democratic lawmakers to cancel $50,000. Biden has consistently rebuffed this higher figure throughout his presidency.<\/p>\n\n\n\n

Recent White House leaks to the press suggest that $10,000 is the figure borrowers can expect.<\/p>\n\n\n\n

How many will benefit?<\/strong><\/p>\n\n\n\n

The cancellation of $10,000 would likely wipe the slate clean for a potential 15.2 million borrowers, federal data shows. For 30.5 million others, $10,000 in cancellation would put them closer to repaying their debt, so long as interest doesn\u2019t accumulate faster than they can repay.<\/p>\n\n\n\n

The White House told The Washington Post in a May 27 article that it was debating limiting cancellation to borrowers who earned less than $150,000 in the prior year or less than $300,000 for borrowers who filed jointly.<\/p>\n\n\n\n

Income limits complicate cancellation. Borrowers would have to consent to the Internal Revenue Service sharing their income information with the Department of Education. Otherwise, the Education Department won\u2019t have access to it. This barrier to entry means borrowers could miss out on cancellation even if they\u2019re eligible.<\/p>\n\n\n\n

\u201cI get why they are talking about means testing for it because it takes some of the political arguments off the table,\u201d says Mayotte. \u201cBut it means borrowers will have to take some kind of action.\u201d<\/p>\n\n\n\n

What\u2019s standing in the way?<\/strong><\/p>\n\n\n\n

Several moving parts could influence Biden\u2019s decision to cancel debt<\/a> (or not):<\/p>\n\n\n\n