What Stimulus Checks May Signal For Student Loan Cancellation

Ruben Onsu

Sen. Bernie Sanders (Photo By Tom Williams/CQ Roll Call) CQ-Roll Call, Inc via Getty Images Pay close attention to the new stimulus checks. They may be a good predictor of what to expect for student loan cancellation. Here’s what you need to know—and what it means for you. Student Loans […]

Pay close attention to the new stimulus checks. They may be a good predictor of what to expect for student loan cancellation.

Here’s what you need to know—and what it means for you.

Student Loans

Congress is debating the new stimulus package, and stimulus checks are at the forefront. Notice the difference in the Democrat and Republican proposals for stimulus checks:


  • Amount: $1,400 stimulus checks
  • Income: $75,000 or less ($150,000 for joint or married filers)


  • Amount: $1,000 stimulus checks
  • Income: $50,000 or less ($100,000 for joint or married filers)

Democrats want to offer more economic stimulus to a broader cross-section of recipients. Republicans, concerned with federal spending, want to target stimulus checks to those who need the most financial support. These competing perspectives also could play out with student loan cancellation. Why? Let’s learn more.

How much student loan cancellation will you get?

The first question is “How much student loan cancellation will you get?” There are no guarantees that Congress will cancel student loan debt. One thing is certain: expect a student loans showdown. However, let’s assume for a moment that Congress considers student loan cancellation. President Joe Biden wants to cancel student loans immediately. He has proposed $10,000 of student loan cancellation in response to the Covid-19 pandemic, but wants Congress to cancel student loans through legislation. There have been multiple proposals in Congress to cancel student loan debt, including a plan from Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) to cancel up to $50,000 of student loans for each borrower who earns less than $125,000. However, it’s not as simple as assuming that student loan cancellation with be one of these amounts. Biden says he won’t cancel student loans through executive order, and it’s unlikely he will support $50,000 of student loan cancellation.

Senate Republicans generally don’t support outright student loan cancellation. If student loan cancellation is included in the new stimulus package or taken up in Congress, one option is that Republicans completely oppose any attempt to cancel student loans. An alternative (although less likely) option is Republicans challenge the amount of student loan cancellation. Their proposal for stimulus checks may be a good barometer for their approach. Fiscal conservatives will be wary of $10,000 of student loan cancellation for every borrower, which could cost nearly $400 billion. Therefore, under this hypothetical, Republicans could seek to limit the amount of student loan forgiveness to a lower, fixed number such as $2,500 or $5,000. This same strategy has happened with stimulus checks and unemployment insurance. With unemployment insurance, for example, Democrats proposed $600 a week enhanced unemployment insurance and Republicans proposed $300 a week. If Congress addresses student loan cancellation in a bipartisan way (emphasis on “if”), expect a battle on the amount of student loan forgiveness.

Will you qualify for student loan cancellation?

Everyone will not get student loan cancellation. Plan accordingly. Despite what you may have read, it’s unlikely that every student loan borrower will get student loan forgiveness. If Congress cancels student loans, expect requirements, qualifications and limitations. There are many ways that Congress could limit student loan forgiveness. For example, Congress could limit student loan cancellation to federal student loans only, or more narrowly, certain types of federal student loans. Similarly, Congress could provide student loan forgiveness only to borrowers with college debt and exclude borrowers with graduate school debt.

Republicans proposed limiting stimulus checks based on income. Republicans could try the same tactic with student loan cancellation. If Republicans don’t completely oppose student loan cancellation, they could support a lower income threshold to qualify. Warren and Schumer have pegged student loan cancellation to $125,000 of annual income. It’s possible, like stimulus checks, the income threshold is lowered to $50,000, for example. That doesn’t mean Democrats will agree to a lower threshold, but don’t be surprised if it’s proposed.

Student Loan Cancellation Without Republicans

There may be many changes for your student loans in 2021. Sen. Bernie Sanders (I-VT) says Congress should pass $2,000 stimulus checks and student loan cancellation without Republicans. Sanders thinks Congress can cancel student loans through the budget reconciliation process, which potentially could avoid Democrats needing 60 votes to pass major legislation. However, Congress doesn’t have a universal plan for widescale student loan cancellation. First, Republicans in the House and Senate likely will oppose widescale student loan forgiveness. Second, Democrats need to decide if they can find common ground as a party on student loan cancellation. Progressive Democrats in Congress will push for higher amounts of student loan forgiveness for more student loan borrowers. Moderate Democrats may align with Biden’s plan, while some may opt for no student loan cancellation or propose modifications to income-driven repayment plans.

Will your student loans get cancelled?

Will your student loans get cancelled? Without internal consensus on the amount and qualifications for student loan cancellation, student loan forgiveness won’t become reality in the near-term. Biden proposed to cancel student loans three ways. If Democrats don’t align on outright student loan cancellation, they could universally support others ways to cancel student loan debt. However, if recent tweets are any indication, it’s become increasingly clear that student loan cancellation isn’t a foregone conclusion. Therefore, don’t count on automatic student loan cancellation. Instead, get a student loans game plan. Start with these three options, all of which have no fees:

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