It seems that everyone these days has an opinion on wide-scale student loan forgiveness. If there is any wide-scale student loan forgiveness — which is a big maybe — it’s important to understand who qualifies for student loan forgiveness and who likely won’t get any student loan forgiveness. Let’s explore.
There seems to be a major misconception that every student loan borrower will get student loan forgiveness. Multiple progressive members have Congress have called for total student loan cancellation. It’s not uncommon to read tweets like “Cancel all student loans now” or “Biden must cancel all student loan debt.” For example, Sen. Bernie Sanders (I-VT) has proposed that all student loan debt, including both private and federal student loans, should be cancelled. However, there is no support in Congress or the White House to enact wide-scale student loan cancellation for every student loan borrower.
Private student loans haven’t really been considered for student loan cancellation because the federal government doesn’t own private student loans. Rather, student loan borrowers borrow private student loans from private lenders. While the federal government conceivably could pay off individual private lenders and therefore cancel private student loans, it’s highly unlikely and administratively complex. Even the main proposal in Congress for wide-scale student loan cancellation would limit student loan forgiveness for federal student loan borrowers only.
Student loan cancellation won’t be for student loan borrowers who earn a high salary. The corporate lawyer, doctor, dentist or MBA who earns $3oo,000 a year won’t get student loan cancellation. Again, not everyone will qualify for student loan forgiveness. The main proposal on wide-scale student loan forgiveness from Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) proposes to limit student loan forgiveness to federal student loan borrowers who earn up to $125,000 annually.