The Senate is expected to vote on a new Covid aid package today. The bill includes a provision that would allow the forgiveness of the student loan between December 31, 2020 and January 1, 2026.
While the bill does not include student debt forgiveness, the provision stands out as a potential signal that debt forgiveness is a serious priority on the horizon.
“If the language is as broad as it sounds, it would lay the groundwork for any student loan forgiveness, including President Biden’s $ 10,000 proposal, to be tax-free,” says higher education expert Mark Kantrowitz. “It would also seem to forgive after 20 or 25 years in a tax-free income-based amortization plan.”
For example, if a borrower had forgiven $ 10,000 in student debt, he or she would not be taxed as if he or she had earned an additional $ 10,000 that year.
House and Senate Democrats have repeatedly urged Biden to forgive “broadly” up to $ 50,000 in federal debt through the executive order, according to an approach that Senate Majority Leader Chuck Schumer has reiterated that Biden should take over during his first 100 days in office.
But Biden has repeatedly rejected the idea of up to $ 50,000 in student debt forgiveness and has stated that he will only support up to $ 10,000 in debt forgiveness and would prefer to draft Congressional legislation.
This push against the leaders of his own party has raised concern among advocates of student debt forgiveness and has caused skepticism among borrowers expecting relief.
While most American adults support the federal pardon of student loans, recent surveys by the OneClass study guide platform found that only 13% of current college students expect to see implemented by the new administration a student debt forgiveness policy.
“The federal government has had a disappointing track record in providing assistance to student borrowers under the previous administration,” says Richard DeCapua, OneClass’s vice president of academic affairs. “While there are influential Democrats who are asking for forgiveness of loans, students in general still do not believe this relief will be in the near future.”
Another factor that can affect the timing and likelihood of enacting student debt forgiveness is how the new officials of the Department of Education in power go smoothly.
On Friday, federal head of student aid Mark Brown resigned. Brown, a retired chief of staff in the U.S. Air Force who was appointed by former Secretary of Education Betsy DeVos in March 2019, shared the announcement in a video message sent to his staff saying, “While aside, I ask you to do whatever is necessary to support the elements of the current administration’s policy. “
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