Biden’s announcement about the renewal of student loan relief for another 90 days came as a surprise to everyone, and it sent shockwaves through the Higher Education Act world.
There is a chance for more student loan forgiveness now that Covid-19 has become an epidemic, which is continuing and that pressure from Democrats in Congress to forgive student loans is mounting.
If Biden expands student loan forgiveness, it could appear like one of the following:
- 1. Biden May Extend Student Loan Forgiveness Until The End of The Covid-19 Pandemic
- 2. Biden May Cancel Up to $10,000 In Student Debt With an Executive Order
- 3. Biden May Increase the Duration of Temporary Student Loan Relief For a Few More Months
- 4. Biden Can Cancel More Specific Student Loans
- Download The Loan Comparison Calculator
- 1. Evaluate Student Loan Repayment Based on Income
- 2. Figure Out How to Get Public Service Student Loan Forgiveness
- Frequently Asked Questions
1. Biden May Extend Student Loan Forgiveness Until The End of The Covid-19 Pandemic
Some lawmakers believe that the current 90-day extension is insufficient in light of the Covid-19 health crisis, and they are seeking for further options.
This would allow the most vulnerable student loan borrowers to recoup financially and generate more money for living costs, debt repayment, and other expenditures.
The announcement also comes as interest rates on student loans are anticipated to rise in the next year.
Despite these worries, Biden is unlikely to provide student loan forgiveness until the epidemic has passed.
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2. Biden May Cancel Up to $10,000 In Student Debt With an Executive Order
In the coming months, expect Democrats in Congress and social and civic organizations to continue making statements about wide-scale student loan cancellation.
Supporters say that widespread student loan forgiveness would improve the economy, narrow gaps in income and status, assist struggling borrowers, and allow young people to get married.
Biden has always been in favor of broad student loan forgiveness.
He supports up to $10,000 in student loan relief, but he does not believe that he has the executive authority to do so.
So far, Biden has not made any moves to cancel student debt on a large scale (and it does not appear that he will in the near future).
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3. Biden May Increase the Duration of Temporary Student Loan Relief For a Few More Months
If Biden extends the student loan payment pause for a fourth time, the most likely option is to extend it yet again.
He could push the deadline beyond its original date of July 1, 2020. According to reports, he would be willing to give student loan relief for another four months.
For example, he may seek another 90 day extension if his most recent term was from February 1 to May 1.
He might also opt for a shorter or longer duration (such as 30 days or 120 days), depending on the situation.
Biden will undoubtedly consider a number of variables, including the growth of the Covid-19 epidemic and the state of the United States economy, among others.
4. Biden Can Cancel More Specific Student Loans
If Biden expands student loan cancellation, he can continue to concentrate on specific student loan forgiveness.
It’s very probable that Biden will continue with targeted student loan forgiveness, which he has already implemented.
Since becoming president, Joe Biden has canceled $12.7 billion of student debt.
Students who have qualified for the Social Security Administration’s Teacher Loan Forgiveness Program, as well as other borrowers misled by their institution or school, may also be eligible.
Biden’s approach to student loan discharge has been targeted at particular student loan borrowers rather than all student loan borrowers.
Biden could potentially cancel the loans of these organizations or try to appeal to a new audience.
But after considering all of the possibilities, what Biden really wants student loan borrowers to do during this period?
There are 2 main things to consider:
1. Evaluate Student Loan Repayment Based on Income
Income-driven repayment plans are a good alternative for students with bad financial circumstances who are struggling to repay their student loans.
The four most popular income-driven repayment alternatives are:
- Income-Based Repayment.
- Pay As You Earn.
- Revised Pay As You Earn.
- Income-Contingent Repayment.
Income-driven repayment options use your disposable income, family size, and state of residency to determine your monthly student loan payment.
Contact your student loan provider to learn more about your options.
Keep in mind: You may be eligible for student loan forgiveness after 20 or 25 years of monthly payments under an income-driven repayment plan.
If you’re currently enrolled in an income-driven repayment plan, make sure to check your earnings, family size, and state of residence at least once a year to ensure that your student loan payments are correct.
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2. Figure Out How to Get Public Service Student Loan Forgiveness
If you want to pay off student debt faster, you may not be employed in public service, but you still want to if that’s what it takes.
The Public Service Loan Forgiveness program was created by Congress in 2007 to assist student loan borrowers in receiving public service loan forgiveness.
To be eligible, you must work for a qualified public service or non-profit employer and make 120 monthly student loan payments. You must also enroll in an income-driven repayment plan to be considered.
The Biden administration made significant modifications to the program to assist more student loan borrowers obtain student loan forgiveness, while the public service loan forgiveness scheme has previously rejected 99% of applicants.
Student loan borrowers will be able to submit a limited waiver until October 31, 2022, allowing them to count past student loan payments that did not qualify.
The Public Service Loan Forgiveness (PSLF) program is still accessible, so if this interests you, consider a job with a qualified public service or non-profit organization.
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Frequently Asked Questions
No, you don’t have to do anything. It will happen automatically for all federal student loan borrowers and is available since March 2020.
No matter what type of loans you’ve taken out before or how much money was outstanding at one point in time
This loan relief does not apply to private student loans, so you should continue to repay them.
If you’re having difficulties repaying your private student loans, contact your lender to see if there are other options. Check these 6 tips instead of seeking private loan forgiveness.
If you have FFELP student loans, these are federal government-backed student loans issued before 2010 by banks and financial companies.
Many FELP borrowers have been dissatisfied because they were not eligible for student loan relief.
A direct consolidation loan is one of the ways for these student loan borrowers to reduce their interest rates.
You can apply to have your FFELP debts removed from your credit report and converted to Direct Loans, which may qualify for student loan forgiveness. Contact the Department of Education or your student loan provider for additional information.
Marie got her journalism degree from the University of California and is an award-winning financial journalist, who’s responsible for collecting and analyzing information concerning students and young adults within the world of finance.
Marie has spent her career with more than 5 years writing for unique media outlets like Yahoo finance, GoBankingRates, and CNBC. She also teaches them how to plan strategically to get out of loan debts easily.
Her goal is to educate students about the different stages in life that involve finances so they can get their money’s worth.