How Mass Student Loan Debt Cancellation Will Work, If Biden Approves
Biden is allegedly close to enacting sweeping student loan cancellation, here's how the process would work.
Biden has touted plans for student loan cancellation on a massive scale since campaigning for the oval office. For the past few months, he has insinuated that he plans on using his executive power to cancel $10,000 in debt for all federal loan borrowers. Now that the order could come any day, the Department of Education has laid out the groundwork for how exactly they would enact this massive, first-of-its-kind nationwide debt cancellation.
Politico obtained documents from an internal agency outlining plans from chief officials within the education department ranks detailing plans on how the federal agency would carry out student loan cancellation on this vast scale. From the looks of it, the process will be quick and efficient, with little to no effort needed on the part of individual borrowers. But still, these plans will be futile, unless the president keeps good on his promise to cancel debt for college loan borrowers.
This scale of student loan debt cancellation has never been executed before. But according to the obtained documents, the Education Department appears to be on top of handling the endeavor. Debt relief would be enacted automatically and is said to be completed within months once initiated. It will affect millions of borrowers across the nation, and the agency says they already have the information needed for each individual. The process even accounts for individuals who quality but don’t necessarily show up on the system, with a process for them to apply through the Student Aid website.
Also within the obtained documents, it was noted that Education Secretary Miguel Cardona was briefed on the process and plans for rolling out student loan cancellation. While he didn’t make it clear whether or not he approved of the outline of plans, he insinuated his consent in a statement noting that the process would offer “immediate eligibility” for millions of borrowers. He even indicated that this sweeping action would return money into the hands of these borrowers within 45 days.
The documents even detailed a major factor that is making some critics of student loan cancellation fearful of negative consequences this monumental action could cause on the economy. A publication from the University of Chicago reported that the majority of student loan debt in America is held by the wealthiest population, which in turn would place a majority of this debt back into the hands of people that won’t necessarily need that extra cash. To address this, the report alleged that there may be income limits put in place so that not everyone with student loan debt will qualify.
Now that the plans have been laid out, the rest of the decision lies in the hands of President Biden. But as time ticks on, many hopefuls wishing to receive federal aid on their burdensome debt wonder what the hold up is. Back in April, Biden vowed to have a decision on student loan cancellation within weeks. Since then, he has asserted he remains diligent on the matter, with plans to make a decision by the end of August, coinciding with the end of the moratorium on student loan payment pauses. With just a month to go until that date, the nation watches with eager eyes to see what the president decides.
