Student loan debt forgiveness for $10,000 or $50,000? What you need to know

The gift of student loan debt forgiveness may be coming.

Sarah Tew/CNET

As the pandemic continues to weigh on millions of people financially, the federal government is looking for additional ways to relieve those stresses. For starters, it’s been sending out $1,400 stimulus checks and has continued supplemental unemployment checks in the amount of $300. Plus, the government has made changes to health care savings and revised the child tax credit to bring eligible families thousands of dollars (calculate your total here). And now, students are the next group that could receive help from President Joe Biden or Congress through student loan debt forgiveness.

Students in the US have an accumulated total of $1.71 trillion in loan debt, making it second in consumer debt behind home mortgages. Lawmakers this year have called repeatedly for Washington to forgive some, if not all, of the debt. Biden made canceling $10,000 of loan debt per student a part of his election campaign, but some members of Congress say that isn’t enough and want him to forgive $50,000 per student. 

Currently, Biden hasn’t canceled any debt across the board, though $1 billion in loans for students defrauded by for-profit colleges was forgiven. Here’s where the situation stands now when it comes to student loan forgiveness. We’ll continue to update this story as it develops. 

What’s going on with the student loan debt right now? 

During his presidential campaign, Biden called for forgiving $10,000 of federal student loan debt per person. He also laid out additional plans for college students in the Biden Plan for Education Beyond High School, such as free tuition and more money for federal grants.

Shortly after taking office, Biden signed an executive order to extend the pause on student loan payments and interest till the end of September. Former President Donald Trump initially suspended payments at the start of the coronavirus pandemic, and the loan suspension was extended two additional times

In Biden’s American Rescue Plan, a provision removed any tax penalty if student loans are forgiven. The IRS treats debt discharged for less than what’s owed as taxable income. This would apply to both government and private loans. The forgiveness provision lasts until Dec. 25, 2025. However, as president, Biden has yet to formally forgive any student loan debt. 

It’s important to keep in mind how there has been no movement on loan debt cancellation as there is a growing number of scammers claiming they can help you get your loans forgiven

Can Biden even forgive $50,000 in student loan debt? 

During a CNN town hall back in February, an audience member asked if Biden would cancel $50,000 of student loan debt.

“I’m prepared to write off a $10,000 debt, but not 50” thousand, Biden said. “Because I don’t think I have the authority to do it by signing [with] the pen.”

It appears Biden may have changed his sentiment. On April 1, he asked Education Secretary Miguel Cardona if it’s within the president’s powers to cancel $50,000 in student loan debt. The department has yet to announce its findings. 

What could happen next?

Depending on the response from the secretary of education’s office, a few things could take place. Biden may be able to sign an executive order that cancels some debt per student. Or it may be that Congress would have to pass a bill, if sweeping cancellations are outside Biden’s power. In either case, the final amount canceled, and any rules and exceptions over public and private debt, would be contentious areas of negotiation. 

Whatever the outcome, it’s unlikely to occur imminently, though it’s a topic we’re keeping a close eye on. 

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