No, you can’t cancel your own student loans.
Here’s what you need to know.
Rep. Tom Cole (R-OK) has introduced the Can’t Cancel Your Own Debt Act, which would:
- disqualify members of Congress from getting their student loans cancelled through federal student loan forgiveness programs if enacted during their time in Congress;
- this includes student loan cancellation by executive order (the president), agency action (U.S. Department of Education) or an Act of Congress (Congress);
- prevent members of Congress from getting any service- or employment-based student loan cancellation (such as public service loan forgiveness) for time served as a member of Congress.
(Student loan forgiveness could be the reason that Democrats lose the midterm elections).
“The American people expect their representatives to act impartially and in the best interests of their constituents – not their own financial interest,” Cole said. “It is simply unconscionable that a Member of Congress making an annual salary of $174,000, paid for by the American taxpayer, could then personally benefit by voting to cancel the repayment of their federal student loans. Members of Congress collecting a six figure salary should surely be required to repay the money they borrowed from the U.S. Treasury.”
Congress shouldn’t be able to cancel its own student debt
Cole wants to exempt members of Congress from getting any federal student loan forgiveness due to the inherent conflict of interest. Cole is concerned that legislators who support wide-scale student loan cancellation are seeking to get their student loan forgiven too. (Where Biden stands on student loan cancellation). Based on recent disclosures, there are 59 members of Congress who collectively hold nearly $6 million of student loans. Cole referenced a recent letter that 80 House and Senate Democrats sent to President Joe Biden regarding immediate student loan cancellation of up to $50,000 of student loans. According to recent financial disclosures, 17 member of Congress who signed the letter collectively reported personal student loan debt of up to $1.9 million. Cole notes that if Congress or the president cancels up to $50,000 of student loans, 11 of these 17 members of Congress would have their student loans completely cancelled.
(How federal student loans will change this year).
Practically, Congress won’t cancel its own student loans
It’s unlikely that Congress would seek to cancel its own student loans. (Biden has cancelled $15 billion of student loans). Cole’s proposed legislation would explicitly prohibit any attempt from a member of Congress to benefit from wide-scale student loan cancellation. Practically, here’s why members of Congress won’t get student loan forgiveness.
- Wide-scale student loan cancellation: Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) proposed up to $50,000 of student loan cancellation. However, Schumer and Warren would limit student loan forgiveness based an annual income of $125,000. Since members of Congress earn $174,000 annually, they would not qualify for any student loan forgiveness under this proposed plan. (Here’s who won’t get student loan forgiveness). That said, that income threshold could change, so Cole’s legislation want to make it clear that members of Congress would be disqualified from student loan cancellation regardless of income.
- Public service loan forgiveness: (Do you qualify for $5 billion of student loan forgiveness?) The Public Service Loan Forgiveness program provides federal student loan cancellation for borrowers who work full-time for a qualified public service or non-profit employer and make 120 monthly payments. Serving as an elected member of Congress does not qualify for public service loan forgiveness. That’s already policy per the U.S. Department of Education. That said, Cole’s legislation would reiterate this policy.
Student loans: next steps
While members of Congress may be banned from student loan cancellation, you may be wondering whether you can qualify. While there are several opportunities for student loan forgiveness, there doesn’t appear to be a clear path toward wide-scale student loan cancellation. Congress hasn’t passed any legislation, and Biden doesn’t believe he has executive authority to bypass Congress. Importantly, temporary student loan relief ends soon. So, make sure you’re prepared for the restart of student loan payments. This includes understanding all your options and choosing the best action plan based on your personal situation and financial goals.
Here are some popular ways to save money on your student loans: