Congress and Joe Biden could release a new stimulus package. It is likely that $2,000 stimulus checks as well as state and local aid are going to be included. It is probable that Congress could include student loan cancellation in the new stimulus package. Joe Biden wants Congress to cancel the student loans as soon as possible. Also, some House and Senate Democrats support student loan cancellation. Before Joe Bidan and Congress cancels student loans, they have to agree how much student loan debt will get cancelled and who will get student loan cancellation.
10,000 Dollars Student Loan Forgiveness Stimulus Package
There are 5 options that Congress could cancel student loans in the new stimulus package.
Option 1: Cancel 10,000 dollars of the student loans for all federal borrowers
The first option, cancelling 10,000 dollars of the student loans for all federal borrowers. While the student loans were dropped from the recent stimulus package, Congress would cancel $10,000 of student loans for all federal student loan borrowers. Under this option, Congress could cancel the student loans like Direct Loans. But, the Cares Act, the 2.2 trillion dollars stimulus plan excluded FFELP Loans and Perkins Loans from the student loan relief such as paused payments. Congress would need to pay off the owners of FFELP Loans and Perkins Loans.
Option 2: Cancel 10,000 dollars for some federal borrowers
The second option, cancelling 10,000 dollars of the student loans for federal borrowers. In this option, Congress would cancel 10,000 dollars of federal student loans for several student loan borrowers. Actually, this option is similar to the first option, here Congress could select to exclude FFELP Loans and Perkins Loans. If Congress doing this, it would be the same kinds of the student loans contained in the Cares Act. That stated, since the Cares Act, Democrats and some Republicans have already proposed to include FFELP Loans and Perkins Loans in order that all federal student loan borrowers will be able to get student loan cancellation.
Option 3: Cancel 10,000 dollars if you obtain $125,000 of income
The third option, cancelling 10,000 dollars if you earn 125,000 dollars of your income. In this option, Congress would cancel 10,000 dollars of the student loans for each borrower who obtains 125,000 dollars of annual income. There are lots of ways your student loans would change this year. The student loan cancellation is one possibility. Congress would select a higher or lower income threshold, however Joe Biden has referenced this amount in his student loan plan. Generally, the supporters of student loan forgiveness want to increase the amount of potential beneficiaries who get student loans cancelled. The opponents very want to limit student loan forgiveness completely. For your information, income limitation is one method to shrink the pie, even though the opponents could push for a lower income threshold such as $75,000, for instance, that was the cut-off for stimulus checks.
Option 4: Cancel 10,000 dollars if you are distressed economically
The fourth option, Congress would cancel $10,000 of student loans for borrowers who are distressed economically. In fact, this language appeared in the Heroes Act which is the stimulus package that House Democrats passed last year and from which Joe Biden has said that he wants to base his new stimulus plan. Economically distressed might be defined in lots of ways. In the Heroes Act, economically distressed refers to a student loan borrower who would otherwise pay $0 monthly via an income-driven repayment plan, they were in student loan default. Under this definition, many student loan borrowers will not accept any student loan forgiveness. In alternative, Congress could, for instance, describe economically distressed as unemployed or otherwise materially impacted financially from the corona pandemic.
Option 5: Cancel 50,000 dollars of student loans if you obtain 125,000 dollars of income
The fifth option, Congress would cancel up to 50,000 dollars of the student loans for each borrower who obtains 125,000 dollars or less of annual income. This is the proposal from Elizabeth Warren and Chuck Schumer. They trust that this option is going to stimulate the economy. Also, Warren and Schumer want Joe Biden to cancel student loan debt directly. But, Joe Biden will not cancel $50,000 of student loans. He has championed 10,000 dollars of student loan forgiveness. Reminded by the potential cost, this fifth option is the least to be included in the new stimulus package.
How to pay off Student Loans faster?
What is the best method to pay off student loans? There is no guarantee that Congress is going to cancel student loans in the new stimulus package. Joe Biden and Congress want to cancel the student loan debt, however Congress also wants to pass other policies like stimulus checks first that could delay any student loan cancellation. That is why it is vital for you to make a student loan game plan right now. Please start with these three options, all of which have no fees: Student loan refinancing, Income-driven repayment plans and Student loan forgiveness.
About Student Loan Forgiveness
Student Loan Forgiveness refers to a variety of programs which can finally erase some or all of your student loan debt. Those programs have their requirements and approval standards. Some of them are available just for specific professions, such as lawyers, teachers and military. In fact, not all forgiveness programs are going to work for every student, but most borrowers will be able to discover a program to help them get some of their student loan debt wiped away.
Student Loan Forgiveness programs
The programs of Student Loan Forgiveness are based on the service in a certain job, like a job in the nonprofit sector or a qualified public service position. The programs need a time commitment before your debt is discharged. You will be able to check your debt after 5 to 25 years.
Here are the programs of Student loan forgiveness:
- Public Service Loan Forgiveness (PSLF)
- Teacher Loan Forgiveness
- Nurse Corps Loan Repayment Program
- Income-driven repayment plans
- Student loan forgiveness for military members
- Forgiveness programs for doctors
- Loan forgiveness programs for lawyers
- Loan forgiveness programs for AmeriCorps