President Joe Biden (Photo by Alex Wong / Getty Images)
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You may not receive a stimulus check:and the same can happen with the cancellation of student loans.
Here’s What You Should Know.
Stimulus control
If you got a first stimulus check and a second stimulus check, chances were you would get a third stimulus check. However, after the House passed President Joe Biden’s $ 1.9 trillion stimulus package, including a third stimulus check, something changed. Initially, the criteria for getting the third stimulus check of $ 1,400 for individuals or $ 2,800 for married or joint submitters were based on the same income threshold as the first two incentive checks: $ 75,000 income for individuals and $ 150,000 for married or joint submitters. To appease moderate Democrats in the US Senate who wanted stimulus controls to be more targeted, the income threshold was changed. Now the income limit has been changed as follows:
Second stimulus check
- Individuals: $ 75,000 annual income (full phase out for $ 100,000)
- Married or joint filers: $ 100,000 annual income (full phase out of $ 200,000)
Third incentive check
- Individuals: $ 75,000 annual income (full phase out for $ 80,000)
- Married or joint filers: $ 100,000 annual income (full phase out of $ 160,000)
According to to the Washington Postthis means that 17 million fewer Americans – including 12 million adults and 5 million children – will receive an incentive 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 receive a stimulus check.
This could mean bad news for student loan cancellations. This is why.
Are your student loans canceled?
Are your student loans canceled? You may be wondering what the new incentive package means for canceling student loans. Congress dropped the cancellation of student loans from the new stimulus package, nor was it included in the latest stimulus package. With stimulus controls lowered for 17 million Americans, you should expect the same thing to happen with student loan cancellations. This means that the cancellation of a student loan can be limited in several ways. The current income limit for student loan cancellation is targeted at $ 125,000 for individuals. For example, Senator Elizabeth Warren (D-MA) and Senate Leader Chuck Schumer (D-NY) want to cancel student loans of up to $ 50,000 for borrowers by order of the executive. This would only apply to federal student loans and would only be available to borrowers with incomes less than $ 125,000. Biden uses the same income threshold for his student loan plan for tuition-free education. If Congress is willing to cut incentive controls to be more targeted, you can expect student loan cancellations to be limited in a similar fashion.
The income limit for the third stimulus check is already $ 50,000 lower than the income limit for the 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 above the stimulus control threshold? If Congress cancels student loans, student loan forgiveness will likely become a battle between amount (For example, $ 50,000 vs $ 10,000) and who is eligible (For example, $ 75,000 in annual income versus $ 125,000). So it’s not as easy as asking if student loan debt will be canceled. That is only the first question. The bigger questions are how much student loan should be canceled and how targeted the 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 will likely object to the widespread cancellation of student loans, namely the cost. This could lead to more discussions about how to tackle student loan forgiveness. As a result, millions of the 45 million student loan borrowers hoping for student loan cancellation will not fulfill their wish.
Pay off student loans
If you have student loans, make sure you understand all of your student loan repayment options. As Congress debates student loan forgiveness on a grand scale, it is unclear whether there will be student loan forgiveness, how much there will be, and who will be eligible. Here are some possible options: