Student Loan Debt Forgiveness: Where It Stands Now

The Biden administration hasn’t made a decision when it comes to forgiving student loan debt, despite pressure from progressive Democrats that have called on the president to issue an executive order that would wipe out millions of borrowers’ debt.

However, the administration’s latest moves toward student loan forgiveness suggest that widespread student loan cancellation could be possible in the future.

Here’s what to know about student loan debt forgiveness and how soon it could impact your student loan debt.

What’s happening right now with student loan forgiveness?

In his most recent and obvious step toward mass forgiveness, Biden in early April requested that U.S. Secretary of Education Miguel Cardona oversee a legal review of whether cancellation of student loan debt without congressional approval is constitutional. The results of this review could help the Biden administration decide if forgiveness is an option, when it could happen and how much they would forgive.

Warren’s Senate hearing highlights projected outcome of $50K in student loan forgiveness

While the results of the legal review are expected to take a few weeks, there is still pressure mounting for Biden to act quickly, especially from Democrats like Sen. Elizabeth Warren. On April 13, Warren held a hearing on new data from the Department of Education that highlighted how many borrowers would receive full forgiveness from mass student loan cancellation.

In 2020, Biden proposed forgiving $10,000 in federal student loan debt per borrower. Since then, Warren and other progressive Democrats have pushed Biden to forgive $50,000 per borrower. While Biden has opposed forgiving $50,000, he hasn’t completely written off forgiving a larger amount.

According to the Department of Education, just about 15 million borrowers would see their federal student loan debt completely forgiven under Biden’s $10,000 cancellation proposal, while about 36 million would see their debt erased under Warren’s $50,000 proposal.

Out of 44,972,000 federal student loan borrowers, here’s how many borrowers would see their total student loan debt completely forgiven with amounts between $10,000 and $50,000 per borrower.

Borrowers in default or delinquency would also benefit greatly from mass student loan forgiveness. Nearly 4.7 million borrowers in default would have their federal loan balances forgiven under Biden’s proposal, while 9.8 million borrowers would have full forgiveness under Warren’s proposal.

Congressional Democrats are hopeful that data highlighting the benefits of a larger forgiveness amount will nudge Biden in that direction. However, it is highly unlikely that Biden would forgive a larger amount. When asked about forgiving $50,000 during a CNN Town hall in February, he stated, “I will not make that happen.”

During the town hall, he argued that the funds used to forgive $50,000 per borrower would be better spent on providing early education for children in disadvantaged circumstances. He also argued that forgiving that large of an amount would disproportionately impact students who attended prestigious schools like Ivy League institutions.

What proposals for student loan forgiveness have been made?

A number of Biden administration proposals — some of which have become legislation — have already erased millions of dollars in student loan debt. Among them:

New stimulus package makes federal student loan forgiveness tax-free

In March, a $1.9 trillion stimulus package — also known as the American Rescue Plan — included a provision that makes student loan forgiveness free from federal taxation through 2025.

The provision was introduced in March 2021 as the Student Loan Tax Relief Act and was led by Democratic Sens. Elizabeth Warren and Bob Menendez. Through the Relief Act, borrowers will not be responsible for paying federal…