Student Loan Forgiveness Not Part Of Democrats’ $1.85 Trillion Bill

Student loan forgiveness is suddenly not a priority for the Joe Biden administration as Congress excludes it from the massive $2 trillion spending bill.

The latest budget deal is expected to lift millions of American families from problems caused particularly by the Covid-19 pandemic. Therefore, the exclusion of any kind of education debt relief is a disappointment to borrowers and advocates who banked on President Biden’s campaign  promises to cancel at least $10,000 loans for all borrowers.

Outstanding debt from student loans in the U.S. has reached an all-time high around $1.8 trillion, posing a greater burden to households than car loans, installment loans or credit card debts.

Many borrowers are still struggling to repay the debts with more than 25% of them in delinquency or default.

Student Loan Forgiveness

In October President Biden’s administration extended the freeze on student loan payments for an extra period of four months.

Biden’s administration extended the freeze to the end of January 2022, with officials clarifying that it was the final extension. That means that approximately 42 million borrowers of student loans should therefore prepare to resume repayment in just a few months.

The pause on student loan debt payment has been in place since March 2020 when the U.S. Department of Education gave most people with federal student loans the option to pause their payments without interest accruing and most of them have done so.

“They must understand that people have become used to not paying student debt, and many have begun to ask why they should ever have to pay again,” said Luke Herrine, former legal director of the advocacy group the Debt Collective.

Going back on their promises could cost the party as the country prepares for mid-term elections in a few months.

“Re-starting student loan payments just before a mid-term election is politically idiotic,” Herrine said.

The White House has not responded to these concerns nor given a clear indication yet that the government plans to go through with the student loan forgiveness program.

However, advocates of wide-spread student loan forgiveness are still optimistic that the president could still use his executive powers to cancel the student loan debts through an executive order.

These hopes stem from the recent developments where the President Biden has asked the U.S. Department of Justice and U.S. Department of Education to review his legal authority allowing him to clear loans without requiring clearance from the Congress. There are no details on the progress yet, but the president has hesitated on taking that move.