Here is what President Joe Biden’s student debt relief means for you.
Here’s what you should know.
Biden stunned everyone on Wednesday when he chose to extend the student loan payment freeze for another 90 days. Let’s have a look at what this implies for you:
1. Student loan forgiveness will be extended until May 1, 2022
The good news is that student loan relief will be extended for an extra 90 days after it was set to expire on January 31, 2022. This is the same student loan relief that has been available to more than 40 million borrowers since March 2020. This is Biden’s third extension of student loan forgiveness, after two renewals of the initial student loan relief in the Cares Act, the $2.2 trillion stimulus plan, by President Donald Trump. Because of the unexpected extension, you now have three extra months to figure out your best student loan repayment strategy. (Previously, Biden confirmed that the student loan relief program will begin.)
2. There is still no student loan relief for private student loans
It is important to note that this student loan relief is only available for federal student loans. (While student loans may be stopped, here’s why Biden extended student loan relief.) Private student loans, like earlier student loan forbearance, are ineligible for this student loan relief. If you have private loans, your lender may provide several alternatives for forbearance or deferral if you are having difficulty making student loan payments. (What increased interest rates imply for your student loans.)
3. The Progressive Democrats are a strong advocate for your student loans
Senate Majority Leader Chuck Schumer (D-NY), Sen. Elizabeth Warren (D-MA), Rep. Alexandria Ocasio-Cortez (D-NY), and Rep. Ayanna Pressley (D-MA), among others, have led the push to prolong the student loan payment halt. After months of haggling, Biden agreed to the long-awaited extension. (Here’s how to receive student loan forgiveness during Biden’s presidency.) Temporary student loan forbearance would have ended on January 31, 2022 if not for their constant appeals — and the backing of several civic and social groups — to postpone the commencement of student loan payments. (However, don’t expect Biden to cancel student loan before the student loan relief program expires.)
4. Nothing is impossible with student loans
When it comes to student loan, never say never. One moment, it seems like there will be no more student loan relief. Then there are three more months of student loan forgiveness. (Right now, here’s who qualifies for student loan forgiveness.) The increase in Covid cases due to the Omicron variety, as well as ongoing financial difficulties for at least some student loan borrowers, were some of the causes that may have prompted the president to prolong student loan relief. The basic truth is that student loan forgiveness is a moving target. The Biden administration has shown a strong commitment to student loan debtors, both in terms of giving student loan relief and canceling $12.7 billion in student loans.
5. Student loan relief is just temporary
While it may be tough to recall the last time you paid federal student loans, keep in mind that this loan relief is just temporary. Yes, when student loan forgiveness ends on May 1, borrowers will have received more than two years of assistance. This student loan relief has included no forced federal student loan payments, no new student loan interest accrual, and no collection of delinquent student loans. This student loan reduction, however, will not endure forever. Begin planning today for how you will pay off your school debts. Don’t put it off until the last minute. Find out what your best alternatives are right now. Here are a few common methods for paying off student loan faster:
- Refinancing a student loan (lower interest rate + lower monthly payment)
- Income-driven repayment plan (lower payment, but same interest rate)
- Public service loan forgiveness (student loan forgiveness for public servants)
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