Will you be eligible for student loan forgiveness?

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If there is a plan to write off student loans, will you be eligible for student loan forgiveness? Not necessarily.

Here’s what you need to know.

Student loans

In the ongoing debate over whether to cancel student loans, one thing is certain: nothing. Despite the enthusiasm for the possibility of student debt cancellation, there is less clarity on who is eligible for student loan forgiveness. Of course, that assumes Congress or President-elect Biden cancels student loans. If this happens and there is no collateral, the details of the student loan cancellation and beneficiaries have yet to be determined. Here are 5 important questions that Congress and the President should consider in determining if you qualify for a student loan forgiveness:

1. Is the plan to cancel federal student loans or cancel private student loans?

Most of the student loan cancellation proposals were for federal student loans. However, House Democrats proposed in the Heroes Act – the $ 3 trillion stimulus package – to cancel private student loans. Congress could decide to cancel either federal student loans or private student loans (or even both). Most likely, if Congress chooses one type of student loan to cancel, Congress would choose to cancel federal student loans held by the United States Department of Education. Private student loans are made between student borrowers and private lenders. Often, private student loans are sold to investors. Any private student loan cancellation project may be more administratively burdensome for the federal government.


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