President Joe Biden extended student loan relief for the fourth time. Let us answer your most important questions.
Here’s what you need to know.
Now that Biden has extended the student loan payment pause, you might be wondering what that means for your student loans. Here are 5 key questions student loan borrowers may be asking themselves:
1. When does student loan relief end?
When does the student loan end? Currently, Biden has extended the student loan payment pause to August 31, 2022. That’s four additional months of student loan relief. As of March 2020, student loan borrowers are no longer required to make federal student loan payments and have not been charged new interest on their federal student loans. Collectively, student loan borrowers have saved $5 billion a month on their student loans since March 2020. The Federal Reserve estimates that student loan easing has saved student loan borrowers $195 billion on their student loans. (Biden could extend student loan payment pause forever).
2. Will the student loan payment pause be extended again?
The payment pause for the student loan has now been extended six times. (Student loan pause: Senator says extension of student loan relief is unfair to most Americans). Congress passed the Cares Act — the $2.2 trillion stimulus package — in March 2020. This law, signed into law by President Donald Trump, granted historic student loan relief. Trump has extended this student loan relief twice during his presidency. Biden has extended that student loan easement six more times. In light of the Nov. 8 midterm election, Biden could extend the student loan payment pause for the remainder of 2022. However, there are no guarantees. For now, student loan borrowers should prepare to resume student loan payments starting September 1, 2022. (New proposal would extend student loan payment pause and cancel student loans).
3. What student loans are eligible for Student Loan Relief?
As with previous student loan relief extensions, the student loan payment pause only applies to federal student loans. (Biden could cancel student loans while also ending student loan relief). This includes direct loans but does not include FFELP loans or Perkins loans that are not owned by the US Department of Education. Likewise, private student debt is not included in this student loan relief. If you are struggling to pay off personal debt, contact your student loan officer to discuss possible student loan repayment and student loan forgiveness options. (Student loan cancellation and student loan payment pause are confusing. Here’s what you should know.)
4. Can I make voluntary student loan payments?
You may be wondering if you can make optional student loan payments during the student loan disbursement pause. (Student loan pause: everything Biden said). If you can’t currently afford student loan payments, you’re not alone. However, if you can pay any amount on your federal student loans, it is financially beneficial. (5 Student Loan Ease Options). Why? The interest rates for federal student loans are currently 0%, ie no new interest accrues. Every dollar of student loan repayment first reduces the interest on the old student loan. Once you’ve paid off the interest, each additional dollar directly reduces your main student loan balance. This is a unique opportunity to pay off student loans faster, and any amount you can afford can save you money. (Senator: Cancel all student loans).
5. Are your student loans forfeited?
Is Your Student Loan Called Out? That’s the question everyone asks. (Here’s who doesn’t qualify for $6.2 billion student loan cancellations). Biden has forfeited $17 billion in student loans since taking office. However, Biden has focused on targeted student loan cancellations rather than large-scale student loan forgiveness. From now until the midterm elections, progressive Democrats in Congress will likely pressure Biden to enact a large-scale executive action cancellation of student loans. Some members of Congress say Democrats will lose the midterm elections unless Biden enacts a large-scale cancellation of student loans. So far, Biden has asked Congress to legislate up to $10,000 in student loans. However, White House Press Secretary Jen Psaki says Biden is still considering a large-scale cancellation of student loans.
Are You Prepared for Student Loan Repayment? The student loan payment pause is only temporary, so now is the time to prepare a student loan repayment game plan.
Here are some smart ways to save money on your student loans: