Debt Relief, student loan debt, Student Loans

White House Considering Executive Action to Cancel Portion of Nation’s Federal Student Loan Debt

The Biden administration is considering issuing an executive order that would effectively cancel some portion of the $1.6 trillion in federal student loan debt held by 43 million Americans. This statement comes as no surprise as student loan forgiveness and student loan reform were consistently topics of discussion during the 2020 Presidential campaign.  

The statement came last Thursday from White House press secretary Jen Psaki. She indicated the administration was looking into whether President Biden had the executive authority to cancel a portion of the nation’s outstanding student loan debt. However, they also indicated that they would welcome any legislation brought forth by Congress to do the same.  

This statement is the first time the administration has outwardly stated that they would be willing to utilize executive action to forgive student loan debt. Previously, as a candidate, Biden had stated that he wanted to include a plan to cancel at least $10,000 in student loan debt as part of his national economy recovery plan. When this measure was not included in President Biden’s $1.9 trillion stimulus package, many were disappointed and criticized the lack of student loan relief involved in the deal. 

Democrats in Congress have encouraged the president to use executive authority to accomplish this goal, even though they have wider authority to craft legislation that would accomplish the same objective.   

A group of legislators, including Senator Majority Leader Charles Schumer (D-NY), Senator Elizabeth Warren (D-Mass), and Representative Ayanna Pressley (D-Mass) introduced a resolution requesting the President provide up to $50,000 in tax-free student loan debt cancellation for all federal student loan borrowers. They argue that this executive action would greatly boost the nation’s economy.

President Biden has already directed the Education Department to continue the existing hold on federal student loan payments until September 30, 2021. The extension of the student loan moratorium was one of the first actions he took just hours after being sworn into office. 

Executive action may be the only way for student loan debt to be forgiven, according to Democratic lawmakers. The Democrats currently have a slim majority in both chambers of Congress, but the opposition from the other side is fairly strong when it comes to cancellation of student loan debt.   

Democrats do have the ability to pass student loan reform legislation through “budget reconciliation,” a measure which would allow them to pass legislation without any Republican support. At this point, the rescue package proposed by Biden does not include any provisions involving student loan cancellation, however, which means any immediate budget reconciliation would not include debt cancellation. For the time being, lawmakers are pushing on the President, hoping he will act and push forward this issue on his end.  

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For borrowers who are struggling with student loan debt, relief options are available.  Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt.  It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com. 

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