3 Ways Congress May Cancel Your Student Loans - Forbes

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While the focus is on President Joe Biden to cancel student loans, there are at least three ways that Congress could pass student loan cancellation too.

Here’s what you need to know.

Student Loans

Progressive Democrats are pressuring Biden to cancel student loan debt. They want Biden to cancel student loans — preferably up to $50,000 per borrower — through an executive order. However, Biden said he doesn’t support $50,000 of student loan cancellation nor does he believe he has unilateral authority to cancel student loan debt. In good faith, Biden will consider student loan forgiveness through executive order and will also ask the U.S. Department of Justice to review his legal authority to cancel student loans without further congressional authorization.

Here’s the thing: Congress can pass student loan cancellation without the president cancelling student loans through executive action. Here are three potential ways:

1. Congress passes student loan cancellation through legislation

First, Congress could pass student loan cancellation through standalone legislation. This is the simplest and most traditional path to cancel student loans. There are several proposals in Congress to cancel student loans, including up to $50,000 of student loan cancellation per borrower. While progressives have rallied around student loan cancellation, any legislation could stall in Congress due to Republican opposition. Republicans won’t support student loan cancellation, whether it’s $50,000 or $10,000, for example. It’s also unclear whether Senate Majority Leader Chuck Schumer (D-NY) has enough votes from moderate Democrats to pass student loan cancellation of any amount. If his public pressure of Biden is any indication, it appears unlikely that Schumer has enough votes to pass student loan cancellation (as currently proposed) through traditional legislation.

2. Congress passes student loan cancellation in new stimulus package

Second, Congress could pass student loan cancellation in a new stimulus package. Congress is finalizing a stimulus package now that could include stimulus checks and unemployment insurance. However, Congress dropped student loan forgiveness from the new stimulus package. If it’s such a high priority, why was it dropped? Student loan cancellation was excluded so that Congress could focus on more immediate economic relief with stimulus checks and unemployment insurance, among other financial stimuli. That said, one option is that Congress could include student loan forgiveness in the new stimulus package. Another is that Congress includes student loan cancellation in a future stimulus later this year. Again, there may not be bipartisan support in Congress for student loan cancellation, which would remain a legislative roadblock. However, Democrats and Republicans could work together to forge a bipartisan solution as part of a broader economic relief bill.

3. Congress cancels student loans this way

Third, Congress could cancel student loans through the budget reconciliation process. Sen. Bernie Sanders (I-VT), who is the chairman of the U.S. Senate Budget Committee, says the budget reconciliation process is the best way to pass $2,000 stimulus checks and student loan cancellation without Republicans. Budget reconciliation was created under the Congressional Budget Act of 1974 and is used in the U.S. Senate to expedite legislation on spending, revenue or debt, for example. Student loan cancellation is major legislation, and therefore it would require a 60-vote supermajority. Sanders says the budget reconciliation process is one way to circumvent the 60-vote supermajority.

Will your student loans get cancelled?

Will your student loans get cancelled? Democrats in Congress could pursue any of these avenues to pass student loan cancellation. The hold-up will be whether enough members of Congress will support the legislation. Absent pursuing the budget reconciliation process, the question will be whether Schumer and Sen. Elizabeth Warren (D-MA) can craft bipartisan legislation that appeals to moderate Democrats and at least some Republicans. Biden may cancel student loans, pending review from the Justice Department. However, there is no guarantee that Biden has executive authority for student loan cancellation, nor is it guaranteed he would cancel student loans if the Justice Department confirms he can. For example, the Trump administration issued a non-binding memo that said a president cannot cancel student loans unilaterally. For now, make sure you have a game plan for your student loans while Congress decides its next move. You can explore these options for now, all of which have no fees: