Will Biden Cancel Student Loans?

By Mentor Staff | Edited By Mentor Staff

Updated On October 12, 2021

Editorial Note: This content is based solely on the author's opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.

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Joe Biden’s election as the next president has many student loan borrowers wondering whether Biden will cancel student loans. The latest student loan debt statistics show that 45 million borrowers collectively owe more than $1.6 trillion. Among other policy priorities to stimulate the economy, Biden may consider student loan forgiveness.

In this article, we will address Biden’s plan for your student loans, including the following:

Top Picks For Student Loan Refinancing

December 2022

Variable APR ?APR, or Annual Percentage Rate, is the price you pay to borrow money. Variable APR means that your interest rate can fluctuate over time, which can increase or decrease your monthly student loan payment. Typically, a variable-rate loan has a lower introductory rate than a fixed-loan rate loan. Variable APR includes a 0.25% discount when you enroll in autopay.
Fixed APR ?APR, or Annual Percentage Rate, is the price you pay to borrow money. Fixed APR means that your interest rate will always stay the same. Even if interest rates change, your interest rate or monthly payment will not. Fixed APR includes a 0.25% discount when you enroll in autopay.
APR
4.49% - 8.99%
4.49% - 8.99%
4.49% - 8.99%

View Details

on SoFi's website

Overview

Variable APR:
4.49% - 8.99%
Fixed APR:
4.49% - 8.99%
Minimum Credit Score:
650
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,000 ($10,000 in CA)

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All states
Hardship Deferment:
Yes
Co-signer Option:
Yes
3.99% - 8.29%
4.39% - 8.99%
3.99% - 8.99%

View Details

on Earnest's website

Overview

Variable APR:
3.99% - 8.29%
Fixed APR:
4.39% - 8.99%
Minimum Credit Score:
650
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5-20 years
Borrower Residency:
All States except NV
Hardship Deferment:
Yes
Co-signer Option:
No
3.99% - 8.29%
4.39% - 8.99%
3.99% - 8.99%

View Details

on NaviRefi's website

Overview

Variable APR:
3.99% - 8.29%
Fixed APR:
4.39% - 8.99%
Minimum Credit Score:
650
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,001 ($10,001 in CA)

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5-20 years
Borrower Residency:
All States except NV
Hardship Deferment:
Yes
Co-signer Option:
No
3.53% - 7.24%
4.48% - 7.29%
3.53% - 7.29%

View Details

on ELFI's website

Overview

Variable APR:
3.53% - 7.24%
Fixed APR:
4.48% - 7.29%
Minimum Credit Score:
680
Minimum Income:
$35,000
Fees:
None
Minimum Loan Amount:
$10,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All States
Hardship Deferment:
Yes
Co-signer Option:
Yes
2.50% - 8.65%
3.99% - 8.49%
2.50% - 8.65%

View Details

on Splash's website

Overview

Variable APR:
2.50% - 8.65%
Fixed APR:
3.99% - 8.49%
Minimum Credit Score:
640
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5 – 25 years
Borrower Residency:
All states
Hardship Deferment:
Varies
Co-signer Option:
No
5.09% - 11.67%
5.39% - 11.87%
5.09% - 11.87%

View Details

on Citizens' website

Overview

Variable APR:
5.09% - 11.67%
Fixed APR:
5.39% - 11.87%
Minimum Credit Score:
Not disclosed
Minimum Income:
$24,000
Fees:
No prepayment or origination fees
Minimum Loan Amount:
$10,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All states
Hardship Deferment:
Yes
Co-signer Option:
Yes
2.50% - 6.80%
4.49% - 6.90%
2.50% - 6.90%

View Details

on Laurel Road's website

Overview

Variable APR:
2.50% - 6.80%
Fixed APR:
4.49% - 6.90%
Minimum Credit Score:
660
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All States
Hardship Deferment:
Yes
Co-signer Option:
Yes
3.27% - 6.87%
3.99% - 10.68%
3.27% - 10.68%

View Details

on LendKey's website

Overview

Variable APR:
3.27% - 6.87%
Fixed APR:
3.99% - 10.68%
Minimum Credit Score:
680
Minimum Income:
$24,000
Fees:
None
Minimum Loan Amount:
$5,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All states, except ME, ND, NV, RI, WV
Hardship Deferment:
Yes
Co-signer Option:
Yes
-
3.94% - 9.08%
3.94% - 9.08%

View Details

on ISL's website

Overview

Variable APR:
-
Fixed APR:
3.94% - 9.08%
Minimum Credit Score:
670
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,000 ($10,000 in CA)

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All states, except OR and ME
Hardship Deferment:
Yes
Co-signer Option:
Yes

Biden Plan to Cancel Student Loans

During his presidential campaign, Biden committed to cancel up to $10,000 of student loan debt for every student loan borrower. Sen. Bernie Sanders (I-VT) and Sen. Elizabeth Warren (D-MA) were the first candidates to propose student loan forgiveness on the campaign trail. They both support plans to cancel student loans in greater magnitude, however. For example, Sanders wants to cancel all $1.6 trillion of student loan debt, including federal and private student loans. Warren wants to cancel student loans for 95% of student loan borrowers. Biden, who is more politically moderate than Sanders or Warren, previously didn’t support outright student loan forgiveness for all student loan borrowers. However, due to the Covid-19 pandemic, Biden supports up to $10,000 of student loan forgiveness for each student borrower.

Biden Plan For Tuition-Free College

In addition to his plan to cancel student loans, Biden also supports “free college.” Specifically, Biden would make college “tuition-free.” This too would be a form of student loan forgiveness because students could borrow fewer student loans if their college was tuition-free. Here’s how his plan would work:

  • 4-Year Public Colleges: If you attend a four-year public college or university, your tuition would be free.
  • 2-Year Public Colleges: If you attend a two-year community college, your tuition would be free. You may also qualify for free tuition at a trade school or similar career program.
  • HBCU’s and MSI’s: You could receive up to two years of free tuition at HBCU’s and MSI’s as well as tribal colleges.

Tuition-free college would not be available to every student. Your family must earn less than $125,000 annually to qualify. Remember, tuition-free college only covers tuition and related fees. However, other college expenses such as room and board would not be free.

Biden Plan for Student Loan Forgiveness

Biden also has plans to revamp student loan forgiveness, and these plans are related to his plans to cancel student loans and offer tuition-free college. For example, Biden would forgive your student loan debt if you meet these qualifications:

  • Public colleges: If you have federal student loans from a public college or university, you could receive student loan forgiveness.
  • HBCUs and MSIs: If you have student loan debt from a Historically Black College and University (HBCU) or a Minority-Serving Institution (MSI), then you also could receive student loan forgiveness.

Like tuition-free college, your family must earn less than $125,000 to qualify. Plus, this student loan forgiveness only applies to undergraduate tuition. So, if you have graduate student loans, this student loan forgiveness wouldn’t be available to you.

Separately, Biden also wants to simplify the existing Public Service Loan Forgiveness program and help borrowers get student loan forgiveness after five years. Currently, borrowers must make 120 monthly payments, or 10 years, before they receive any student loan forgiveness.

3 Ways to Cancel Student Loan Debt

There are several ways that Biden could cancel student loans. Here are three potential ways:

  1. Cancel student loans through Congress
  2. Cancel student loans through a stimulus package
  3. Cancel student loans through an executive action

The first two avenues to cancel student loan debt would occur through Congress. First, Congress could pass legislation encompassing Biden’s plan to cancel $10,000 of student loans for every borrower. Alternatively, Congress could agree to a stimulus package to help spur economy recovery. Within that stimulus deal, Congress could include second stimulus checks, unemployment benefits and student loan forgiveness, for example. Third, Biden could bypass Congress and try to cancel student loans through executive action. Some legal scholars believe that a president can cancel student loans through executive order. Others say that only Congress, not the president, can cancel student loans under the Separation of Powers clause in the U.S. Constitution.

Plan to Cancel $50,000 of Student Loans

Sen. Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) proposed a Senate resolution that empowers the president to cancel up to $50,000 of student loans through an executive order. A resolution is non-binding and express the sentiments of a member or members of the Senate. Therefore, this proposal is not law. If Congress grants the president the authority to cancel student loans, then Biden conceivably could cancel student loans through executive order. Absent congressional approval, it’s likely that if Biden cancels student loans through executive action, it could result in litigation to prevent the effort.

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