This new proposal would extend the student loan payment pause and cancel student loans.
Here’s what you need to know – and what it means for your student loans.
Sen. Patty Murray (D-WA), chair of the US Senate Health, Education, Labor and Pensions (HELP) Committee, is calling on President Joe Biden to extend the student loan payment pause until at least 2023 and to call in student loans for borrowers. (However, these Republicans want to end the freeze on student loan payments).
“This credit system is unacceptable and we can fix it,” Murray said. “When you get a loan to pay for higher education, you deserve a system that works. Signing up for a sensible repayment plan should be easy, no one should end up with a monthly payment they can’t afford, and debt relief shouldn’t require running the gauntlet of paperwork. That’s not asking too much — so until we fix our student loan system, the student loan payment pause must continue to provide much-needed relief to borrowers.”
(Biden could extend student loan payment pause forever)
Student loan: Extend payment break and cancel student loan
Murray offered a four-point plan to give relief to student loan borrowers:
1. Give struggling borrowers a fresh start with student loans
First, Murray says student loan borrowers who were in default before the March 2020 student loan payment pause began should be put back in good standing. This means that these student loan borrowers should have cleaned up their negative credit history and be able to rehabilitate their student loans.
(Bombshell Report Claims This Student Loan Servicer Misled Student Loan Borrowers)
2. Income-related repayment should be better and more accessible for borrowers
Second, Murray is pushing for a Senate Democrat plan that would make income-based repayment “more generous and more accessible.” Specifically, the new income-based repayment plan would:
- are available to all student loan borrowers;
- have a simple registration process;
- prevent student loan debt from escalating too much;
- limit monthly student loan payments to no more than 10% of discretionary income; and
- replace existing income-based repayment schedules.
(Biden to call $6.2 billion in student loans)
3. Make sure more student loan loans are forgiven
Third, Murray wants to ensure more student loan loans are forgiven. For example, Murray says the US Department of Education should extend the deadline for temporary waivers on public service loan forgiveness. The Biden administration has made major changes to student loan forgiveness. Now, student loan payments that were previously ineligible for government loan forgiveness can be counted if a student loan borrower completes a limited waiver by October 31, 2022. Murray wants this period to be extended to allow more student loan borrowers access to student loan forgiveness.
(6 Major Changes in Student Loan Forgiveness)
4. Cancel student loans for all student borrowers
Fourth, Murray wants student loan cancellation for all student borrowers. (Biden could deliver student loan cancellation and student loan payment pause this year). Interestingly, she is one of the few senators to have called for student loan cancellations to be prioritized for specific constituencies within the larger borrower population. For example, Murray would prioritize student loan cancellations for “those who are struggling the most,” including student loan borrowers:
- the color;
- with low income;
- who have been making student loan payments for 20 years; and
- who left college without a degree or certificate.
(Cancelling a student loan doesn’t mean what you think it means).
The payment pause for student loans is scheduled to end after May 1, 2022. While it is possible to extend student loan relief, there is no guarantee. Therefore, student borrowers should prepare for the resumption of student loan payments. This includes evaluating all student loan repayment options.
Here are some popular ways to save money on your student loans: