Student Loans – 17 Million Won’t Get Stimulus Checks—Expect The Same For Student loan Cancellation

You may not get a stimulus check—and the same could happen with student loan cancellation.

Here’s what you need to know.

Stimulus Checks

If you got a first stimulus check and a second stimulus check, there was a good probability that you would get a third stimulus check. However, after the House passed President Joe Biden’s $1.9 trillion stimulus package, which included a third stimulus check, something changed. Initially, the criteria to get the third stimulus check of $1,400 for individuals or $2,800 for married or joint filers was based on the same income threshold as the first two stimulus checks: $75,000 income for individuals and $150,000 for married or joint filers. Then, to appease moderate Democrats in the U.S. Senate who wanted the stimulus checks to be more targeted, the income threshold was modified. Now, the income threshold has changed as followed:

Second Stimulus Check

• Individuals: $75,000 of annual income (complete phaseout at $100,000)
• Married or Joint Filers: $100,000 of annual income (complete phaseout of $200,000)

Third Stimulus Check

• Individuals: $75,000 of annual income (complete phaseout at $80,000)
• Married or Joint Filers: $100,000 of annual income (complete phaseout of $160,000)

According to the Washington Post, this means that 17 million fewer Americans — including 12 million adults and 5 million children — will get a stimulus payment. As a result, individuals who earn between $80,000 and $100,000 as well as married or joint filers who earn between $160,000 and $200,000 will not get any stimulus check.

This could spell bad news for student loan cancellation. Here’s why.

Will your student loans get cancelled?

Will your student loans get cancelled? You may be wondering what the new stimulus package means for student loan cancellation. Congress dropped student loan cancellation from the new stimulus package, and it also wasn’t included in the last stimulus package either. Now that stimulus checks have been cut for 17 million Americans, you should expect the same may happen with student loan cancellation. This means that student loan cancellation could be limited in several ways. The current income threshold for student loan cancellation has been targeted at $125,000 for individuals. For example, Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) want to cancel student loans up to $50,000 for borrowers by executive order. This would apply to federal student loans only, and would only be available to borrowers with income below $125,000. Biden uses the same income threshold for his student loans plan for tuition-free college. If Congress is willing to cut stimulus checks to be more targeted, you can expect student loan cancellation could be limited in a similar way.

The income threshold for the third stimulus check is already $50,000 less than the income threshold for proposed student loan cancellation ($75,000 vs. $125,000). Will progressive Democrats be able to justify to skeptical Republicans and moderate Democrats an income threshold that is $50,000 higher than the threshold for stimulus checks? If Congress cancels student loans, student loan forgiveness is likely to become a battle between amount ($50,000 vs. $10,000 for example) and who qualifies ($75,000 of annual income vs. $125,000, for example). So, it’s not as simple as asking whether will cancel student loan debt. That’s only the first question. The bigger questions are how much student loan debt to cancel and how targeted student loan cancellation will be. Some members of Congress want $2,000 stimulus checks every month until the Covid-19 pandemic is over. If Congress passes additional stimulus checks, Republicans and moderate Democrats are likely to raise objections about wide-scale student loan cancellation—namely cost. This could lead to more discussions over targeting student loan forgiveness. As a result, millions of the 45 million student loan borrowers hoping for student loan cancellation may not get their wish.

Pay Off Student Loans

If you have student loans, make sure you understand all your options for student loan repayment. As Congress debates wide-scale student loan forgiveness, it’s unclear if student loan forgiveness will come, how much there will be, and who will qualify. Here are some potential options:

Related Reading

$2,000 stimulus checks every month until Covid-19 over?

Student loan cancellation excluded from new stimulus package

Student loan cancellation less likely if stimulus checks get cut

Bernie Sanders: Let’s cancel student loans without Republicans