We are in year 1 of this ongoing COVID-19 pandemic and The U.S. Department of Education hasn’t come to an agreement to cancel student loan debt for those attending college or who’ve graduated. However; in the last couple of weeks, The U.S. Department of Education announced two rounds of student loan forgiveness , clearing out $1.3 billion held by Americans with disabilities and $1 billion held by defrauded students.
These loan forgiveness announcements are considered small compared with the total $1.7 trillion loan debt held by borrowers but a better solution to student loan forgiveness could be underway because President Joe Biden had asked the secretary of education to see if the executive branch has the power to wipe out $50,000 per borrower in student loan debt.
These proposals on the student loan front came after the $1.9 trillion economic aid package was recently passed back in March where in the package, there was a provision to make forgiven student loans nontaxable which is a big deal because back then, student loan forgiveness was implemented through the powers of the executive branch which left borrowers with a huge tax bill because the IRS treated student loans as financial income.
There is a lot of skepticism around Biden actually going with the forgiveness plan. Therefore; the Biden administration is under pressure from Democrats to forgive MORE student loan debt. Even if the Department of Education tells Biden he has the power to forgive debt, it’s up in the air whether he is allowed to do so but Biden has recently stated that he supports Congress possibly passing legislation that forgives up to $10,000 per student loan borrower.
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