President Joe Biden (Photo by Brook Christopher/WireImage)
It’s possible that you may not get a stimulus check after all.
Here’s what you need to know — and what it could mean for your student loans.
The House passed President Joe Biden’s $1.9 trillion stimulus package. The good news is that the stimulus package includes a $1,400 stimulus check for individuals and a $2,800 stimulus check for married or joint filers. The bad news is that the Senate hasn’t passed the stimulus package—which means things could change. Specifically, the income threshold of who gets a stimulus check could change in the Senate. Currently, to get a $1,400 stimulus check, you must have annual income of $75,000 or less. For married or joint filers, the annual income threshold is $150,000 or less. However, even though the House already voted to approve the stimulus package, Biden is open to a lower income threshold for the new stimulus check. Depending on your income, this could mean you may not qualify for a stimulus check.
On Fox News Sunday, White House Press Secretary Jen Psaki said Biden is willing to target stimulus checks to “ensure they hit the Americans who need that help the most.” This means he could be willing to agree to a lower income threshold, which means certain Americans would no longer be eligible to get a stimulus check. However, Psaki noted that Biden is unwilling to lower the amount of the stimulus checks. It’s unclear what income threshold, if any, will replace the $75,000 and $150,000 thresholds, which were the same as the first stimulus check and second stimulus check.
If Biden is willing to lower the income threshold for stimulus checks, this could spell bad news for student loan cancellation. Why? If fewer Americans get a stimulus check, it would be done to appease moderate Senate Democrats and potentially some Republicans, who are concerned about the size of the stimulus package and lack of targeting stimulus checks to those who are struggling financially. The same compromise could happen with student loan cancellation. For example, Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) plan $50,000 of student loan cancellation by executive order for borrowers who earn $125,000 or less in annual income. This amount is $50,000 higher than the current income threshold for the stimulus check. If Congress decides to limit the income threshold for stimulus checks, it could be used as a barometer for student loan forgiveness too. While Republicans aren’t expected to support any student loan cancellation, targeting wide-scale student loan forgiveness to a smaller portion of the population could garner support from moderate Democrats such as Sen. Joe Manchin (D-WV). It’s also possible that Congress doesn’t apply the income threshold from the stimulus checks, and instead sticks with the $125,000 annual income cut-off or chooses a different qualification criteria.
The debate in Washington to cancel student loans continues. Congress didn’t include student loan cancellation in the new stimulus package, which brings further disappointment to student loan borrowers hoping for student loan forgiveness. Congress also dropped student loan cancellation from the last stimulus package too. This has left some borrowers wondering when, if ever, Congress would cancel student loans. Biden may cancel student loans, but has said he’s unlikely to do so and doesn’t think he has legal authority—even if progressive Democrats in Congress says he does. If you have student loans and are hoping for student loan forgiveness, make sure you understand all your options because it’s unclear if student loan forgiveness will come. Here are some potential options:
Zack Friedman is the bestselling author of the blockbuster book, THE LEMONADE LIFE. Apple named The Lemonade Life one of “Fall’s Biggest Audiobooks” and a “Must-Listen.”