These 5 Things Must Happen Before Biden Enacts Student Loan Cancellation

President Joe Biden (Photo by Eric BARADAT / AFP) (Photo by ERIC BARADAT / AFP via Getty Images)

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Before President Joe Biden approves the cancellation of the student loan, these 5 things must happen.

Here’s what you need to know.

Student Loans

It seems like every day there is a lawmaker, attorney, or student loan borrower telling Biden to cancel the student loan debt. Some say he promised to cancel the student loan when he ran for president. Others say he would cancel the student loans from day one. Still others say he has not canceled enough student loan debt. The reality is that Biden has canceled $ 3 billion in student loans since taking office as president. State the amount substantial. Call it insignificant. Most student loan borrowers, however, focus on the potential for a bigger price tag: major student loan cancellation. Many don’t understand what is taking so long, why it didn’t happen, and when they can expect their student loan to be canceled. Here’s the thing: as with most things, there is a process. Congress didn’t cancel student loans because there wasn’t enough support in Congress from either political party to cancel student loans, be it for $ 10,000 or $ 50,000. Will Biden cancel the student loan debt? To do this, five things have to happen:

1. Biden must have the legal authority to cancel the student loan

Despite what you’ve heard on social media or read online, Biden has no legal authority to unilaterally cancel the student loan without further approval from Congress. Many politicians, including those who are lawyers, have voiced their opinions. However, most legal scholars do not believe that a president can cancel unlimited student loans for every student loan borrower. Yes, Biden has issued a targeted cancellation of the student loan that he is authorized to do by an executive order. However, he has not issued a blanket cancellation of the student loan as he said he does not believe he has the legal authority to do so. As a result, Biden has hired the U.S. Department of Education to make recommendations on its legal authority to cancel student loan debt. The Ministry of Education has been doing this analysis for at least four months and could present its opinion to the President at any time. However, a legal analysis alone is not enough for Biden to issue a comprehensive cancellation of the student loan.

2. The legal authority to terminate student loans must be clear and unambiguous. Cancel

It is not enough to say that “the President has legal powers”. More importantly, the legal authority to cancel the student loan must be clear and unambiguous. Why? When Biden cancels student loans because of an ambiguous interpretation of an existing law or legislation, a number of problems can arise that could potentially stall large-scale student loan cancellation. Proponents of student loan termination cite Section 432 (A) of the Higher Education Act of 1965 and its reference to the authority of the Department of Education to “modify, compromise, relinquish, or release any right, title, claim, lien, or claim”. including any participation or redemption rights. ”While one could read that language and conclude that the Department of Education has unlimited, unilateral powers, there are several reasons why your student loans cannot be legally terminated on that basis. At least section 432 (A) of the Higher Education Act of 1965 is ambiguous. For example, the legislation does not specifically provide that the Department of Education can cancel the debt of any student loan borrower. If Congress had really intended to give such a power, Congress would have made it explicitly clear. Even so, it is unlikely that Congress – which has power over the wallet under the US Constitution – has given the executive full and complete authority to cancel student loans without limit – and in today’s dollars to more than $ 1 trillion Federal debt for student loans. Perhaps the Ministry of Education will come to an alternative conclusion, but the result should be clear so that the President can act with full confidence.

3. It should be made clear whether the termination of the student loan applies to all student loan borrowers

If the Department of Education recommends that the President proceed with a full cancellation of the student loan, the Department of Education should clarify whether there are any restrictions on canceling the student loan. Can the President cancel all student loan debt? Is it restricted to certain student loan borrowers? Is it limited by the type of student loan? Is there a limit on the total amount in dollars? The leading proposal in Congress would limit student loan forgiveness to up to $ 50,000 per borrower, apply only to federal student loans, and only apply to student loan borrowers who earn up to $ 125,000 annually. The president should understand the parameters of his executive power if the Department of Education believes that such executive power exists.

4. The potential legal challenges involved in canceling student loans should be made clear

To be clear, the Ministry of Education makes a recommendation to the President. This is, for example, a non-binding legal opinion that does not count as a court judgment. The Trump administration also commented on the matter, noting that a president does not have unilateral legal authority to issue blanket cancellation of student loans. If the Department of Education determines that the President has clear powers to cancel student loans, it should clarify the potential legal challenges involved in canceling student loans. For example, if the president cancels student loans, legal challenges can be expected. In practice, this could significantly delay the implementation of a comprehensive student loan cancellation. What are the options for such legal delays? What does this mean in practical terms for student loan borrowers? How long can the cancellation of the student loan be delayed? Are there alternatives to avoid such legal challenges? These and other questions should be addressed so that the President can weigh all options.

5. Biden must decide whether to cancel the student loan

Regardless of what the Department of Education recommends – whether the president has legal powers or not – only the president will make the final decision. The President can follow the recommendation of the Ministry of Education or choose an alternative course. So the fifth thing that needs to happen is that Biden decides to issue a major cancellation of the student loan. Biden has stated several times that Congress is the appropriate federal department to cancel student loans, and Biden said he will sign any student loan cancellation bill that Congress sends him. So part one is the legal memo, but part two is what Biden does next.

Make sure you have a clear game plan for your student loans. Even if there is a student loan cancellation, you may not qualify and the student loan cancellation amount may not cover your entire student loan balance. Here are some popular options: