The new stimulus package says this about student loans and student loan cancellation.

Here’s what you need to know – and what it means for you.

Student loans

New $ 1.9 trillion stimulus package proposed by President Joe Biden does not include any student loan cancellation. Stimulus package instead focuses on other policy priorities such as stimulus checks of $ 1,400 and $ 400 per week unemployment insurance. Senate Republicans have proposed a separate $ 618 billion stimulus package – about a third the size of Biden’s stimulus package – that also excludes the cancellation of student loans and offers $ 1,000 stimulus checks in response to the Covid-19 pandemic.

So what does all of this mean for student loan cancellation?

1. Congress cannot cancel student loans in the stimulus package

Biden wants Congress cancel student loans immediately. Biden also has a full plan for student loans. According to his proposal, student loan borrowers would get $ 10,000 in student loan forgiveness in response to the Covid-19 pandemic. The key word in this statement is “Congress,” which means that the legislature, not the president by executive order, will be responsible for canceling student loans. It is still possible that Congress passes student loan cancellation in stimulus package. However, there are several roadblocks. First, Republicans do not support large-scale student loan cancellation. Second, Biden’s stimulus proposal does not include the cancellation of the student loan. Third, the Congress abandoned the cancellation of student loans from the latest stimulus package. As Senate Majority Leader Chuck Schumer (D-NY) says student loan cancellation a top priority, Schumer has focused on promoting a 50,000 student loan cancellation plan. $ on Biden. For example, Schumer tweeted to Biden – a fellow Democrat – to cancel student loans, even though Biden said he’s unlikely to and wants Congress to act instead.

2. Watch Stimulus Checks For Tips On Canceling Student Loans

Stimulus checks and student loan cancellation don’t seem to have much in common. The first is extra money; the latter is debt cancellation. However, Congress’ proposals for stimulus checks – and the legislative dance that follows – shed light on how Congress might function in the first two years of the Biden administration. $ 2,000 Stimulus Checks Can Be Bad News For Student Loan Cancellation. Democrats control the White House and Congress. With the new term of Congress only a few weeks away, Republicans, as a minority party, will continue to be vocal. Senate Minority Leader Mitch McConnell (R-KY) will be as active as Minority Leader as he was as Majority Leader. Expect a student loan showdown. For example, Republicans proposed two changes to stimulus controls in the new stimulus package: small stimulus checks ($ 1,000 stimulus checks) and lower income threshold ($ 50,000 for individuals and $ 100,000 for married or spousal filers). Why? Republicans want to limit federal spending and target economic aid to those who need it most.

3. Student loan cancellation may be available for fewer student loan borrowers

Not everyone can get a student loan discount. Before any cancellation of a student loan, Congress must agree on how much student loan forgiveness and who is eligible. In an effort for national unity, Biden prefers bipartisan legislation in Congress. That’s not to say he won’t sign legislation that only Democrats support. However, while there are many changes for student loans this yearBiden may prefer legislation that incorporates contributions from both parties to Congress. This could have potential implications for student loan cancellation. For example, Republicans want a lower income threshold to qualify for stimulus checks. Schumer and Senator Elizabeth Warren (D-MA) want student loans canceled for borrowers with annual income below $ 125,000. If Congress approves the student loan cancellation, will Congress shrink the cake through various qualifying hoops? For example, will Congress lower the income threshold for canceling a student loan to $ 100,000 or $ 50,000? Will only federal student loans be included? Will there be only certain types of federal student loans (except FFELP loans and Perkins loans)? There are different ways to extend or limit the student loan forgiveness. If stimulus checks are limited by size, income threshold, or both, this could be a glimpse into what could happen with student loan cancellation.

4. Bernie Sanders: Cancel student loans without Republicans

Senator Bernie Sanders (I-VT) has perhaps the most aggressive student loan cancellation plan, both substantively and procedurally. On the merits, Sanders proposed to write off the entire $ 1.7 trillion in student loans. That’s considerably higher than any current congressional proposal, which would write off $ 10,000 or $ 50,000 in student loans per borrower with less than $ 125,000 in annual income. Procedurally, Sanders has a plans to get stimulus checks and cancellation of student loans without Republicans. Sanders proposed using the fiscal reconciliation to pass stimulus checks – which can effectively be done without Republicans. Sanders says the budget reconciliation can be used to write off a student loan. Although the budget reconciliation to cancel student loans is not bipartisan, there is no guarantee that Schumer will take this approach. or that Biden would approve it.

Will your student loans be canceled?

Will your student loans be canceled? Biden proposed to cancel student loans in three ways. This means that Congress could cancel student loans through one or more of these proposals. There is no guarantee, however, that Congress will write off student loan debt. If there is a student loan cancellation, it is not known what qualifications will be imposed and how many student loan borrowers could be excluded. Therefore, make sure you are prepared and have a game plan for your student loans if Congress does not cancel student loans or limit the cancellation of student loans. Start with these three options, all free:

Related reading

Congress could cancel student loans in new stimulus package

10 ways Biden can change student loans

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