Biden could extend student loan relief beyond September 30, but there is a major dilemma
Biden may extend student loan relief beyond September 30, but there is a major dilemma.
Here’s what you need to know.
There are currently two parallel avenues for your student loans. The first – student loan cancellation – relates to the possibility of large-scale student loan cancellation for at least some student loan borrowers. However, the hope of a large-scale student loan cancellation does not appear to be short-term. With the focus on the infrastructure plan and with no news from the Biden administration on the potential timeline, the student loan cancellation appears to be in limbo. The second and most immediate option is the ability to extend student loan relief beyond September 30, 2021, when the following will expire:
- No federal student loan payment;
- Interest rate on federal student loans set at 0%; and
- No collection on defaulted federal student loans.
In the absence of an extension of this student loan relief, federal student loan payments will be due effective October 1, 2021.
Will Biden extend this student loan relief?
The argument for extending student loan relief is clear and looks like this: Student loan borrowers are still struggling financially with the Covid-19 pandemic and it is too early for them to pay off student loans. There are other reasons for delaying student loan payments as well, but this is a fundamental reason. According to a new survey, 90% of student loan borrowers are not ready to repay their student loans as of October 1. However, the word âloanâ could refer to âfinancially loanâ or âpsychologically loanâ, or both. Opponents of extending student loan relief say student loan borrowers will have had 18 months without federal student loan repayments. They claim this amounts to $ 5 billion per month for student loan cancellation – according to the US Department of Education. In total, student loan borrowers will get more than $ 90 billion in student loan cancellations during the Covid-19 pandemic. This student loan forgiveness comes on top of the $ 3 billion Biden has written off since becoming president. Opponents say there is a direct cost to extending student loan relief, even though the Covid-19 pandemic has been traumatic on several fronts, economic and otherwise.
Student loan relief: Biden’s dilemma
Despite arguments on both sides, there is an even bigger dilemma faced by Biden in regards to extending student loan relief beyond September 30. Biden is well aware of the arguments on both sides of extending relief. On the one hand, extending student loan relief would help student borrowers cope with the burden of crushing student debt resulting from an unprecedented pandemic. On the other hand, there is a cost to student loan relief – and as the Department of Education noted – it has been over $ 5 billion per month during the Covid-19 pandemic. The biggest problem for the president – however – is what the extension of the forgiveness of student loans symbolizes. Biden is leading an economic recovery. Politically, it is difficult to say that the economy is recovering, that the number of jobs is strong and that jobs are being created. Then, at the same time, say that the economy is so struggling that student loan borrowers shouldn’t have to pay off student loans after getting 18 months of student loan relief. The messages are contradictory. That said, not all decisions in Washington are based on political calculation, and supporters of extending student loan relief will say put people ahead of politics. However, it will be difficult for the president to argue that the economy is rebounding, but at the same time, he also says that it is not for the student loan borrowers. That doesn’t mean Biden won’t extend student loan relief beyond September 30 as it is a possibility, but it is something that must weigh on the Biden administration as it considers next steps. on student loans.
Even if student loan relief is extended, remember that it is only temporary. You will still owe your student loan balance once payments resume, and your interest rate will be set. That is why it is essential to deal with your student loans now. Get a student loan game plan. Here are some smart options:
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