Federal Loan Repayment

Photo provided courtesy of Pixabay.com.

By Shreya Desai, Staff Writer


The United States charges the highest average tuition fees for baccalaureate degree programs. [1] The average cost of private law school tuition and fees during the 2019-2020 academic year was approximately $49,548, while the average cost at public schools was approximately $28,264 to $41,726, depending on whether the student went in- or out-of-state. [2] The American Bar Association has reported recent law school graduates are feeling frustrated and depressed over their student loan debt. [3] However, these feelings of despair associated with federal loan repayment may come to an end for many. [4] On March 6, 2021, the Senate approved President Biden’s $1.9 trillion stimulus package entitled the “American Rescue Plan [5] ,” which includes a major change for student borrowers who are on an income-driven repayment plan. [6] If this bill gets signed into law, nearly 15 million students who acquired federal loans could have their loans forgiven. [7]


Currently, student loans which have been canceled by the government are still taxable and can be levied at normal income tax rates. [8] A survey in July 2020 revealed that student loan debt affects almost every aspect of lawyers’ lives. [9] Debt has impacted the decisions of many to delay or indefinitely put off having children, marriage, and buying a home. [10] Many were also forced to choose a higher-paying job over a job they actually wanted or to take a job that qualified for loan forgiveness over what they wanted. [11] However, the Student Loan Tax Relief Act, introduced by Senators Elizabeth Warren of Massachusetts and Bob Menendez of New Jersey on March 1, 2021, would put a stop to this practice of imposing surprise tax bills on student loans. [12] In support, the American Bar Association (“ABA”) is pushing for federal legislators to make changes, like the Student Loan Tax Relief Act, that would ease the burden of debt many new attorneys face. [13]


The latest student loan debt statistics show that only 32 people, who were enrolled in income-driven repayment plans, have ever had their student loan debt cancelled.< [14] This number is shockingly low, considering that 8 million people are currently on income-driven repayment plans. [15] The National Consumer Law Center and Student Borrower Protection Center claims that this is partially because student loan servicers fail to steer borrowers into the correct income-driven repayment plans, causing borrowers to pay for their student loans even though they could have received loan cancellations. [16] Nearly 2 million borrowers have been paying off their federal loan debt for at least 20 years, but still have not received loan forgiveness. [17] Other than servicing errors, many also point to the lack of communication between loan servicers and student loan borrowers. [18]


In early April of 2021, President Biden requested Miguel Cardona, the United States Secretary of Education, to oversee a legal review of whether student loan debt is constitutionally able to be cancelled without approval from Congress. [19] This legal review is expected to take a few weeks, but the pressure on President Biden to act quickly to issue an executive order continues to grow. [20] Senator Warren held a hearing on April 13, 2021 to discuss the new data from the Department of Education, which shows how many borrowers could be eligible for full forgiveness from the loan cancellation. [21] Senator Warren said, “Student loan debt is crushing millions of Americans…President Biden has an opportunity to fix that with a stroke of a pen. [22]


In 2020, President Biden proposed that every borrower receive a $10,000 student loan debt forgiveness. [23] However, at the urging of Senator Warren and many other congressional Democrats, President Biden is considering forgiving up to $50,000 in federal loan debt per student borrower. [24] The hope is that clearing a large amount of the $1.7 trillion owed by federal student loan borrowers will help to stimulate the economy and put Black and Latino borrowers, who are disproportionately hurt by the debt crisis, in a better position. [25] The Department of Education has projected that under President Biden’s $10,000 forgiveness proposal, nearly 15 million borrowers could have their debts completely forgiven; however, under Senator Warren’s $50,000 proposal, approximately 36 million borrowers could have their debts erased. [26] Depending on the proposal, nearly 4.7 to 9.8 million borrowers, who have defaulted on their loan payments or are otherwise delinquent, could also greatly benefit from this mass loan forgiveness, should President Biden ultimately issue the executive order erasing federal student loan debt. [27] 


While the Biden administration has not made any concrete decisions on whether it is going to forgive student loan debt, President Biden’s steps of gathering more information on the ability to cancel loans indicate that it is a likely possibility. [28]



[1] Katie Warren, Here’s what college costs in 28 countries around the world, Insider (June 15, 2018) https://www.insider.com/cost-of-college-countries-around-the-world-2018-6 (last visited on April 23, 2021)

[2] Ilana Kowarski, See the Price, Payoff of Law School Before Enrolling, U.S. News (March 31, 2021) https://www.usnews.com/education/best-graduate-schools/top-law-schools/articles/law-school-cost-starting-salary (last visited on April 23, 2021)

[3] Ryan Lane, New lawyers frustrated, depressed by student loan debt, Tampa Bay Times (August 13, 2020) https://www.tampabay.com/news/business/2020/08/13/new-lawyers-frustrated-depressed-by-student-loan-debt/ (last visited on April 23, 2021)

[4] Jillian Berman, 2 million Americans have been repaying their federal student-loans for 20 years, MarketWatch (March 12, 2021) https://www.tampabay.com/news/business/2020/08/13/new-lawyers-frustrated-depressed-by-student-loan-debt/ (last visited on April 23, 2021)

[5] Jacob Pramuk, Senate Democrats say Covid relief plan makes it easier for Biden to cancel student debt, CNBC (March 15, 2021) https://www.cnbc.com/2021/03/15/student-debt-forgiveness-schumer-warren-menendez-urge-biden-to-cancel-loans.html (last visited on April 23, 2021)

[6] Adam Minsky, Congress Makes Big Change To Income-Based Repayment: What Student Loan Borrowers Should Know, Forbes (March 7, 2021) https://www.forbes.com/sites/adamminsky/2021/03/07/congress-makes-big-change-to-income-based-repayment-what-student-loan-borrowers-should-know/?sh=64b2dece34e2 (last visited on April 23, 2021)

[7] Annie Nova, Student loan forgiveness may become tax-free under Covid relief bill. Here’s what that means for borrowers, CNBC (March 8, 2021) https://www.cnbc.com/2021/03/08/what-tax-free-student-loan-forgiveness-would-mean-for-borrowers-.html (last visited on April 23, 2021)

[8] Id.

[9] Lane, supra.

[10] Id.

[11] Id.

[12] Pramuk, supra.

[13] Karen Sloan, ABA Backs Student Loan Debt Relief Measures for Lawyers, Law.com (February 22, 2021) https://www.law.com/2021/02/22/aba-backs-student-loan-debt-relief-measures-for-lawyers/?slreturn=20210322235415 (last visited on April 23, 2021)

[14] Zack Friedman, Wait, Only 32 People got Student Loan Forgiveness? Forbes (March 14, 2021) https://www.forbes.com/sites/zackfriedman/2021/03/14/only-32-people-got-student-loan-cancellation-2-million-didnt/?sh=b8c3f2c13523 (last visited on April 23, 2021)

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] Hanneh Gundersen, Latest news on student loan debt forgiveness: Where policies and proposals currently stand, Bankrate (April 23, 2021) https://www.bankrate.com/loans/student-loans/student-loan-debt-forgiveness-latest-news/ (last visited on April 23, 2021)

[20] Id.

[21] Id.

[22] Pramuk, supra.

[23] Gundersen, supra.

[24] Pramuk, supra.

[25] Id.

[26] Gundersen, supra.

[27] Id.

[28] Id.

Comments are closed.