The New York Times editorial board says that canceling student loans for everyone is a “bad idea.”
Here’s what you need to know — and what it means for your student loans.
In a major blow to supporters of wide-scale student loan cancellation, the New York Times editorial board officially opposes student loan forgiveness for all borrowers. Among the highlights of the new editorial:
- The burden of student loan debt is “crushing” and has caused “lasting, generational damage on the lives of millions of Americans”;
- However, if President Joe Biden enacts wide-scale student loan cancellation through an executive order, it would be “legally dubious, economically unsound, politically unfraught, and educationally problematic”;
- Rather than cancel student loans for everyone, the Biden administration should make higher education more affordable and help student loan borrowers who are the most financially vulnerable;
- Student loan cancellation for all borrowers sets a “bad precedent” and doesn’t address the fact that future student loan borrowers will also borrow student loans;
- If Biden cancels student loans through an executive order, it could be “dragged out in the court for years”;
- If Biden proposes student loan cancellation that Americans don’t view as fair, it could backfire on Democrats in the midterm election; and
- Income limits for student loan forgiveness are “crucial”; otherwise, student loan forgiveness disproportionately benefits higher-income earners. (Student loan forgiveness: here are the potential income limits to qualify).
Biden could cancel student loans, but with limits
Biden is considering wide-scale student loan forgiveness; however, it’s starting to look more targeted. Biden could cancel student loans in at least 3 ways. That said, Biden my impose certain restrictions on who qualifies for student loan cancellation. For example, Biden could:
- limit student loan forgiveness to borrowers based on income, such as $125,000 or lower;
- limit student loan cancellation only to federal student loan borrowers; or
- restrict student loan relief only to college student loans, which would exclude graduate student loans.
Another issue that has been overlooked: what happens to temporary student loan relief? Currently, the student loan payment pause ends August 31, 2022. However, if Biden cancels student loans before then, student loan forgiveness could mean end of student loan relief. The argument goes like this: if student loans get canceled, particularly for financially vulnerable student loan borrowers, there’s less need to extend the student loan payment pause again.
Student loan forgiveness: alternatives
Supporters of wide-scale student loan cancellation note that relief is essential to stimulate the economy, reduce disparities, and help borrowers become debt-free so they can get married, start a family and buy a home. If Biden decides not to cancel student loans, however, there are other proactive steps he can take to help student loan borrowers. First, Biden could work with Congress to amend the bankruptcy laws to make it easier for student loan borrowers to get a fresh start on their student loans. Second, Biden, who has canceled more than $17 billion of student loans, could revamp income-driven repayment plans. (Student loan forgiveness: 5 key takeaways from major announcement). He could automatically enroll student loan borrowers, shorten the repayment period and provide student loan forgiveness sooner. Third, Biden can fix public service loan forgiveness so that more borrowers qualify for student loan forgiveness in exchange for public service.
Biden could announce a decision within weeks, but student loan borrowers also should have a game plan for student loan repayment. You may not qualify for student loan forgiveness, or if you do, all your student loans may not get cancelled. Here are some popular ways to pay off student loans faster:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)