Congress rules out student loan cancellation from latest budget deal
Congress rules out canceling student loans from the latest budget deal.
Here’s what you need to know.
The new $ 3.5 trillion budget – which President Joe Biden and Congressional Democrats hope to pass in September – includes a framework of social and economic priorities, including:
- Free Community College: Democrats are offering two years of community college tuition-free.
- Increased Pell Grants: Democrats have proposed double Pell Grants for $ 13,000 undergraduate student loans by 2028.
- Child tax credit: A potential four-year extension of the child tax credit could help eligible families earn $ 250 per month for each child ages 6 to 17 and $ 300 per month for each child under age 6.
However, one notable economic benefit is missing from this $ 3.5 trillion budget: student loan cancellation. That’s right – among the universal incentives for Pre-K, Medicare and Medicaid, and clean energy – you won’t find large-scale student loan cancellations. It was not even proposed in the budget.
Why the cancellation of the student loan was excluded from the budget
Progressive Democrats in Congress see canceling student loans a top priority. They cite the long-standing need to write off up to $ 50,000 in student loans so that student loan borrowers can get married, raise a family, save for retirement, or start a business. Senator Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) have been tireless champions in supporting this cause. The latest student debt statistics show that 45 million student borrowers collectively owe $ 1.7 trillion in student debt. However, the president and congressional leaders did not prioritize canceling student loans in the annual budget. The most obvious reason is that Republicans do not support large-scale student loan cancellation. However, many Democrats in Congress also do not support the large-scale cancellation of student loans. From the headlines in the news, this may be surprising. However, if Congress voted on the cancellation of the student loan, Congress could not pass the cancellation of the student loan. all amount, including $ 50,000, $ 10,000 or other amount.
Congress could cancel student loans thanks to budget reconciliation
Here’s what’s even more frustrating for student loan borrowers: The budget deal won’t go through a traditional 60-vote qualified majority. Instead, Democrats in Congress are planning a filibuster-proof budget reconciliation deal. This means that instead of Democrats needing Republican support to get 60 votes in the U.S. Senate, for example, Democrats plan to pass the budget deal without Republicans backing. So why did Democrats exclude student loan cancellation from the budget? Student loan cancellation has become a hot topic on Capitol Hill, but maybe not for the reasons you might think. If Democrats offered $ 10,000 student loan cancellation for student loan borrowers – which Biden argues – the total cost could be around $ 400 million to $ 450 million. If Democrats offered up to $ 50,000 for student loan cancellations, the total cost could approach $ 1,000 billion. Democrats could have chosen the amount of the student loan cancellation or some other amount. Senator Bernie Sanders (I-VT), who is the chairman of the US Senate Budget Committee, said the budget reconciliation process was the best way to spend $ 2,000 stimulus checks and loan cancellation students without republicans. Therefore, Congress could cancel student loans through the budget reconciliation process. Budget reconciliation was created under the Congressional Budget Act of 1974 and is used in the United States Senate to expedite spending, revenue, or debt legislation, for example. The cancellation of student loans is a major law and therefore would normally require a qualified majority of 60 votes. Sanders said the budget reconciliation process was a way to bypass the 60-vote qualified majority.
Student loan cancellation: final thoughts
The process of creating and negotiating budgets is not a simple task. There are political and political considerations, and the leadership of Congress must appease the various constituencies both within and outside Congress. For example, the $ 3.5 trillion price tag isn’t final: Democrats have yet to appease moderate Democrats, including Sen. Joe Manchin (D-WV) and Sen. Kyrsten Synema (D-AZ). However, the cancellation of student loans is said to be a major problem for progressive Democrats that could transform a generation of Americans. While there are other “big issues” included in the $ 3.5 trillion budget deal, student loan cancellation is nowhere to be found. The large-scale cancellation of student loans – beyond the temporary forbearance of student loans – was also not found in any of the stimulus packages. While progressives want Biden to enact student loan cancellation by executive order, there does not appear to be a clear legal path for Biden to cancel student loans for every student loan borrower. Biden has acted aggressively to enact a targeted student loan cancellation, and Biden has canceled $ 8.7 billion in student loans since becoming president in January. (Here’s how to find out if you’re eligible for an $ 8.7 billion student loan cancellation.) Biden also twice extended student loan relief, giving student loan borrowers one year of temporary student loan forbearance. So where does that leave student loan borrowers? Student loan borrowers can expect more targeted student loan cancellations. For now, however, Congress is expected to pass the latest budget with multiple financial priorities, but it will not include a priority that many student loan borrowers seek: student loan cancellation. This begs the question: why?
If you have student loans, the next budget deal will not include canceling student loans. Make sure you are ready to pay off your student loan. Here are some popular student loan repayment options to consider if you want to pay off student loans faster: