Student loan forgiveness could spell the end of student loan relief.
Here’s what you need to know – and what it means for your student loans.
President Joe Biden may be weeks away from announcing historic student loan decree to millions of student loan borrowers. While there is no guarantee that Biden will proceed with large-scale student loan forgiveness, Biden could decide to cancel as much as $10,000 or more in student loans for millions of student borrowers. What Does Student Loan Cancellation Mean for Student Loan Easement? let’s explore
Student Loan Relief: What’s at stake
As of March 2020, more than 40 million student loan borrowers have taken advantage of the following student loan relief as a result of the Covid-19 pandemic:
- no mandatory federal student loan payments;
- 0% interest rate on federal student loans and no accrual of new student loan interest; and
- no collection of student loans in arrears.
After Congress passed this historic student loan relief, President Donald Trump and Biden jointly extended the student loan payment pause six times. The payment pause for the student loan has currently been extended until August 31, 2022.
What Student Loan Cancellation Means for Student Loan Easement
Student loan payments are scheduled to resume from September 1, 2022. What Does Student Loan Cancellation Mean for Student Loan Easement? White House Press Secretary Jen Psaki has offered some guidance on the future of student loan relief. Previously, Psaki said Biden would either extend the student loan payment pause or cancel student loans before August 31. “So between now and August 31, [the student loan pause is] either it will be extended or we will make a decision how [White House Chief of Staff] Ron [Klain] referred, about canceling student debt,” Psaki said. Biden recently said he was considering large-scale student loan forgiveness and could make a decision within weeks. It had previously been expected that Biden would extend student loan relief beyond Aug. 31 and potentially cancel student loans ahead of the Nov. 8 midterm election. Why? Progressive Democrats in Congress have warned Biden that failure to enact large-scale student loan legislation could hurt Democrats halfway. However, if Biden cancels student loans now, he could end student loan easing on August 31. Why? The Biden administration extended the student loan payment pause to help student loan borrowers who are struggling financially. However, multiple extensions of temporary student loan relief also gave Biden more time to decide whether to call in student loans. If Biden decides to issue a large-scale student loan forgiveness, his rationale for another extension could be weakened.
Will Biden Cancel Student Loans?
Biden has forfeited $17 billion in student loans since taking office. Will Biden Cancel Student Loans For All Borrowers? No, don’t expect Biden to forgive everyone’s student loan debt. Biden also won’t cancel most student loan debt. If Biden issues large-scale student loan forgiveness, expect student loan forgiveness restrictions. (Here’s who might qualify for student loan cancellation). For example, Biden could set an income threshold of $125,000, $75,000, or some other amount. Biden could also limit student loan forgiveness to federal student loans and college student loans. In this case, student loans and personal loans could be excluded. (Biden confirms he won’t call down $50,000 in student loans – 5 key insights).
Student loans: next steps
Expect a possible student loan forgiveness announcement within weeks. While Biden could call in student loans and extend student loan easing, he could also choose to take none or only one of those options. If Biden does not renew the temporary student loan relief, student loan borrowers will still be able to access other student loan relief programs, such as: B. the waiver of public service loans or income-related repayment. Politically, progressive Democrats in Congress seem to have focused more on canceling student loans (although they also support extending the pause on student loan payments). If Biden ends student loan easing this August, you need to start planning now. Are you prepared? Understand all of your student loan repayment options. Here are several ways to get started and save money: