Students continue to get coronavirus stimulus check but as debt relief

June
15, 2021

3 min read

This story originally appeared on ValueWalk

It is not certain if Congress will approve another round of stimulus checks or not, but students are continuing to get benefits from Biden’s $1.9 trillion stimulus package. More and more universities are giving coronavirus stimulus checks to students by canceling their debt using funds from the $1.9 trillion stimulus package.

Q1 2021 hedge fund letters, conferences and more

Coronavirus stimulus checks: Colleges canceling student debt

Last month, Delaware State University (DSU) announced canceling more than $700,000 in student loan debt. Since then, several colleges and universities have made a similar announcement that they would cancel student debt utilizing the funds from Biden’s $1.9 trillion stimulus bill, which was approved in March.

Recently, Elizabeth City State University in North Carolina noted that it would cancel $286,500 in student debts that is owed directly to the university. Wilberforce University also made a similar announcement in late May. The Ohio based university said it would cancel more than $375,000 in debt for students enrolled in 2020 and 2021.

Wilberforce University’s announcement said that “debt and other debt owed to the university by students from 2020 and 2021 has been settled and carries a zero balance.”

Dartmouth College also announced cancelling student loans for families with an annual income of $125,000 per year or less. Some schools are coming up with debt-free enrollment options for students, to ensure that students don’t go into debt as they start. Dartmouth college, however, would not be using stimulus money to carry out the debt-free enrollment.

After Congress approved Biden’s $1.9 trillion stimulus bill, Education Secretary Miguel Cardona came up with updated policy guidance for colleges and universities. The updated policy guidance allowed colleges and universities to use the funds in several ways to address the student’s needs, including canceling student debt.

“We hope every eligible student takes advantage of these benefits while continuing to focus on their studies,” Cardona said in March while announcing the policy update.

Federal student loan forgiveness: is it coming?

A point to note is that these student debt cancellations is only for the debt that they owe directly to a college or university. It doesn’t include the debt owed to the government or private lenders.

Thus, advocates of student loan forgiveness were expecting Biden to include such a provision in his budget. However, the budget didn’t include any funding for student loan forgiveness. Biden attracted heavy criticism for this as student loan forgiveness was something that he promised during his election campaign. Previously, Biden has shown support for $10,000 in loan cancellation per borrower.

It is, however, still possible for Biden to come up with student loan forgiveness. Biden has already asked the Department of Education (DoE) to work in this direction. Late last month, the DoE also announced that it has started reviewing regulations and other options related to canceling or reducing the burden of student debt.