With wins in Georgia, the Democrats will have a majority in the Senate. What do these gains mean for student loan borrowers? What impact will Democratic control of the House, Senate, and White House have on student debt in the United States?
The life of the borrower could get a little easier thanks to the election results.
An ultra-slim democratic majority moves the needle for student loan forgiveness. It also means that borrowers should expect more laws to make life with student debt easier to manage.
Biden supports the granting of loans, but wants the approval of Congress
President-elect Joe Biden has made it very clear that he will not examine the limits of executive power to extend or terminate student loans.
In a recent interview, he said:
“I’ll get in trouble if I say this … It is questionable whether the President has executive power to cancel up to $ 50,000 in student debt. … Well I think that’s pretty questionable. IM not sure. I probably wouldn’t do that. “
In other words, Biden will only cut student loan balances if Congress approves the plan.
Senate Democratic scrutiny is unlikely to be enough for the more aggressive $ 50,000 student loan scheme backed by Senators Elizabeth Warren and Chuck Schumer.
The idea has not garnered Republican support, and Democratic support also appears to be limited.
Borrowers should pay special attention to Democratic senators from Conservative states such as Jon Tester of Montana and Joe Manchin of West Virginia. With a tiny democratic majority, these two will now have far more influence. So far, neither has signaled support for the plan to reduce student debt by $ 50,000.
The most likely scenario for student debt cancellation
If the student loan forgiveness is coming soon, the most likely amount is $ 10,000.
A version of this debt relief has already been passed in-house as part of a Covid-19 aid package.
As I noted in my article on the likelihood of student loan issuance in 2021, the Senate would be the major obstacle due to the near-uniform Republican opposition to student loan cancellation as a means of economic stimulus. The Senate is now less of a barrier because Mitch McConnell is no longer the majority leader. The Democrats are expected to quickly push for additional economic relief due to the Covid-19 pandemic.
Student loan borrowers should closely monitor business stimulus legislation as it represents the best chance for bulk student loan approval. Debt relief alone probably can’t get through Congress. As part of a wider relief package, it has a chance.
Debate and vote on common sense legislation
Even if there is no forgiveness, the results of the Georgia Senate special election will affect student loan borrowers.
When Mitch McConnell was the majority leader and the Republicans were in charge of major committees, proposals to assist student loan borrowers were seldom debated or voted.
Back to now-all-important Democrats Jon Tester and Joe Manchin both proposed laws to help borrowers. Tester released a plan to help borrowers track student loan forgiveness affected by a national or public health emergency. Joe Manchin has suggested making student loan repayments easier and easier to understand federal loans.
These old suggestions matter for several reasons:
- They show that both senators recognize that student debt is an important issue.
- The suggestions are evidence of Manchin’s and Testers’ desire to deal with student loans.
Hence, borrowers can expect a now Democratic Senate to take more active action on student debts.
Most likely future legislation will address problems with the current system.
Possible corrections can be:
- Simplification of repayment options,
- Taking steps to make college more affordable
- More accountability for federal loan service providers and
- Addressing the high rate of public loan rejection.
The Consequences of Democratic Victories in Georgia Senate Elections
Jon Osseff and Raphael Warnock won the runoff elections. Republicans no longer control the Senate.
The first and most immediate impact to student loan borrowers will likely come from $ 2,000 relief checks for most Americans.
In the area of student debt, there is no popular bipartisan legislation that only requires a vote. It is unlikely to have an immediate impact on student loans.
Looking ahead, the outlook for student loan borrowers is better. Debt relief remains unlikely, but a more realistic option. Further discussions, suggestions, and voting on student loan proposals are a certainty.