Will student loans be canceled in 2022? Experts say no
When President Biden first came to power, student borrowers had reason to hope that some sort of forgiveness for federal student loans might materialize. Biden himself has spoken openly about asking for at least $10,000 in federal loan forgiveness per borrower, and many Democrats in Congress have argued for even more generous forgiveness measures. In fact, Senators Elizabeth Warren and Chuck Schumer both formally asked President Biden in February 2021 to forgive up to $50,000 in student loans per eligible borrower nationwide.
In the related press releaseWarren said canceling up to $50,000 of federal student loan debt through executive action would allow Biden to “provide massive stimulus to our economy, help close the racial wealth gap and ease this impossible burden on tens of millions of families.
Unfortunately, very little has happened in the area of student loan forgiveness since the early days of the Biden presidency. Sure, members of Congress like to reject the idea of sweeping pardons, but without much action to back up their ideas.
For this and other reasons, it seems extremely unlikely that borrowers will see a student loan forgiveness plan pass through Congress or executive action in 2022. We asked the experts why that is, and here’s what they said.
Building back better is not past
According to student loan expert Mark Kantrowitz, who is the author of How to Apply for More College Financial Aid, Congress is unlikely to introduce sweeping student loan forgiveness legislation until the Build Back Better Act is signed into law. Why? Essentially, Kantrowitz says the student loan forgiveness legislation is controversial enough to potentially derail the passage of such legislation.
“With Democrats controlling the Senate with the thinnest margins, every Democrat has a veto,” Kantrowitz says, adding that several Democrats are worried about the high cost of a large student loan forgiveness to begin with.
If anything, says the author targeted student loan forgiveness is more likely to receive support than a large student loan forgiveness. By limiting the amount of loan forgiveness and only offering it to those who really need it, Congress is more likely to agree on legislation that can make a difference.
No consensus on loan forgiveness
Michael Lux from The Student Loan Sherpa also points out that blanket cancellation of student loans will not happen until there is consensus among the major players anyway. Republicans seem to be uniformly opposed to pardons, and Democrats can’t agree on how to do it or how much to pardon, he says.
We’ve already mentioned how Senators Elizabeth Warren and Chuck Schumer want Biden to sign an executive order waiving $50,000 per borrower, while Biden wants Congress to pass a bill forgiving $10,000 per borrower.
“Unless the Democrats get on the same page or get a huge majority in Congress, I don’t think we’ll see loan forgiveness during Biden’s presidency,” Lux says.
Focused efforts elsewhere
Financial educator Eryn Schultz of His personal finances also points out that when it comes to student loans, President Biden seems to be using his political capital elsewhere. For example, suspending student loan repayments and setting interest rates at 0% required enlisting other lawmakers for support, especially since that move likely saved borrowers. $7 billion per month in suspended loan payments.
Not only that, but the president has focused his efforts on student loans to earn a lot changes needed to the Public Service Loan Cancellation Program (PSLF) and offering forgiveness to people with disabilities and those who have been defrauded by their schools, Schultz says.
As other experts have agreed, past statements by the Biden administration imply that they do not believe they have the authority to directly cancel student loans more broadly, she said.
“If the loan forgiveness has to go through Congress, it seems unlikely that it will pass.”
The midterm elections are approaching
Joseph Orsolini from University aid planners says his personal take on the matter is that it may just be too late at this point. Congress doesn’t seem to have the support needed to pass a student loan forgiveness bill, and it seems all the less likely that it will drag on.
That said, Orsolini says he believes the current pause on federal student loan payments will be extended again.
“There’s no way Democrats and the Biden administration want to roll back loan repayments six months before the midterm election,” he says. “All of this would just remind millennials that they haven’t delivered on their promise of student debt relief.”
For a myriad of reasons, experts seem to agree that student loan debt is here to stay, at least for now. With federal student loans requiring payments and starting to accrue interest again on May 1, 2022, this likely means it’s time for those in debt to get to grips with their loans and monthly payments.
In the meantime, it never hurts to take a look at the different repayment plans that can make student loans more affordable, including income-driven plans that let you pay a percentage of your discretionary income for 20 to 25 years before canceling remaining loan balances. If you work in the civil service, you can also check out the Civil Service Loan Forgiveness (PSLF), which can clear your debts after working in a qualifying job for ten years and repay your loans according to a repayment plan based on Income.
With all of that being said, there are still those who believe that the concept of student loan forgiveness will eventually gain favor or a larger portion of Congress. Jeanne Scheper, who is an associate professor and president of the University of California, Irvine’s School of Humanities, says forgiveness needs to be on the way because borrowers have helped other borrowers and because there is an awareness growing national impact of student loan debt on people’s lives and futures.
Scheper points out that the current expansion of loan forgiveness for teachers, nurses, vets and firefighters is made possible because debtors have stepped up. Not only that, but Scheper says that organizations such as the Collective debt, Student debt crisis, Student loan justice, Shared harvestand BACK created toolkits, organized workshops and lobbied politicians.
“Now more people are seeing the impact that widespread student debt cancellation would have for all borrowers,” Scheper said.
Will it matter? For now, we’ll have to wait to find out.