Extending student loan payment pause is unfair to most Americans who don’t have student loans, says this US Senator.
Here’s what you need to know – and what it means for your student loans.
Sen. Joni Ernst (R-IA) says if President Joe Biden extends the pause on student loan payments, it would be both “unfair” and “short-sighted.” The student loan payment pause, which has been in effect since March 2020, is expected to end on May 1, 2022. For the past two years, student loanees have not had to make federal student loan payments and student loan interest has been set to 0%. Now Biden is considering extending the student loan pause for the fourth time during his presidency and sixth time overall. (Biden could pause student loans forever).
“This is a short-sighted and unfair deal for the vast majority of Americans who have not taken on debt and will ultimately be stuck [with] the invoice. Let’s make sure students have a clear picture of these costs before taking out a loan [with] my STUDENT Act instead of forcing others to pay it,” Ernst tweeted.
(Student loan cancellation and student loan payment pause are confusing. Here’s what you should know.)
Bafög relief: an alternative to the Bafög payment pause
Ernst believes the extension of the student loan payment pause — which has saved student loan borrowers a combined $5 billion a month — is not the best public policy. Instead, she and Sen. Chuck Grassley (R-IN) proposed new legislation known as the Student Transparency for Understanding Decisions in Education Net Terms (STUDENT) Act. The STUDENT Act would:
- provide student loan borrowers with an estimate of the total amount of interest they would pay over the life of their student loan;
- ensure more transparency in student loans;
- implement a standard 10-year student loan repayment schedule; and
- disclose the full interest amount during or before taking out a student loan.
While the STUDENT Act does not provide student loan relief, the proposed legislation will enable student loan borrowers to make better financial decisions before borrowing a student loan. It’s hard to believe that there isn’t a law that requires lenders to disclose total interest owed based on a student loan repayment schedule. With more transparency, student loan borrowers could make better decisions about which college or university to attend, how much student loan debt to take on, and how long it might take to repay student loans.
(New proposal would extend student loan payment pause and cancel student loans)
“Students and their families should have a clear picture of the true cost of their loans so they can fully understand how it will affect their future,” Ernst said. “Giving them the tools to know what’s up with their government student loans is sensible and will help them make informed decisions.”
Biden was scheduled to decide today on a student loan payment pause and student loan cancellation
Biden is scheduled to make a decision today on student loan payment pause and student loan termination. This gives student loan borrowers more security to plan for their financial future. Once borrowers know if student loan payments are due after May 1, 2022, they can begin making financial decisions to prepare for student loan payments to resume. Similarly, if student loans are not foreclosed, they may pursue alternative student loan repayment strategies. There is some evidence that Biden could extend the student loan payment pause. (Biden will call $6.2 billion in student loans). For example, White House Chief of Staff Ron Klain said that Biden is considering options to extend the student loan payment pause and call in student loans. The US Department of Education also directed student loan servicers to stop notifying student loan borrowers about resuming student loan payments after May 1. However, there are indications that Biden will not extend the student loan payment pause or cancel student loans. (Here’s who doesn’t qualify for $6.2 billion student loan cancellations). For example, Biden removed student loan cancellations from his annual budget. Another possible option is for Biden to cancel student loans but end student loan easing.
Student loan payments are scheduled to resume after May 1. Most importantly, you review all of your student loan repayment options so you are fully prepared. Only you know your individual financial situation.
Here are some popular methods to pay off student loans faster: