President Joe Biden extended student loan relief for the 4th time. Let’s answer your top questions.
Here’s what you need to know.
Now that Biden has extended the student loan payment pause, you may be wondering what this means for your student loans. Here are 5 major questions that student loan borrowers may be asking:
1. When does student loan relief end?
When does student loan relief end? Currently, Biden has extended the student loan payment pause until August 31, 2022. That’s four extra months of student loan relief. Since March 2020, student loan borrowers haven’t been required to pay any federal student loan payments and haven’t been charged any new interest on their federal student loans. Collectively, student loan borrowers have saved $5 billion a month on their student loans since March 2020. As a result of student loan relief, the Federal Reserve estimates that student loan borrowers have saved $195 billion on their student loans. (Biden could extend the student loan payment pause forever).
2. Will the student loan payment pause be extended again?
The student loan payment pause has now been extended six times. (Student loan payment pause: Senator says extending student loan relief is unfair to most Americans). Congress passed the Cares Act — the $2.2 trillion stimulus package — in March 2020. This legislation, which President Donald Trump signed, granted historic student loan relief. Trump extended this student loan relief twice during his presidency. Biden has extended this student loan relief an additional six times. Given the midterm election on November 8, 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 restart student loan payments beginning on September 1, 2022. (New proposal would extend student loan payment pause and cancel student loans).
3. Which student loans qualify for student loan relief?
As with previous extensions of student loan relief, the student loan payment pause applies only to federal student loans. (Biden could cancel student loans while ending student loan relief). This includes Direct Loans, but does not include FFELP Loans or Perkins Loans that aren’t owned by the U.S. Department of Education. Similarly, private student debt is not included in this student loan relief. If you are struggling to pay private debt, contact your student loan servicer to discuss potential options for student loan repayment and student loan forgiveness. (Student loan cancellation and the student loan payment pause are confusing. Here’s what to know).
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4. Can I make optional student loan payments?
You may be wondering whether you can make optional student loan payments during the student loan payment pause. (Student loan payment pause: everything Biden said). If you can’t afford to make any student loan payments right now, you’re not alone. However, if you can pay any amount toward your federal student loans, it’s financially advantageous. (5 options for student loan relief). Why? Currently, interest rates on federal student loans are 0%, which means there is no new interest accrual. Every dollar of student loan repayment first will reduce any legacy student loan interest. Then, once you pay off interest, every incremental dollar directly will reduce your principal student loan balance. This is a golden opportunity to pay off student loans faster, and any amount you can afford can save you money. (Senator: Cancel all student loans).
5. Will your student loans get canceled?
Will your student loans get canceled? That’s the question everyone is asking. (Here’s who won’t qualify for $6.2 billion of student loan cancellation). Biden has canceled $17 billion of student loans since becoming president. However, Biden has focused on targeted student loan cancellation rather than wide-scale student loan forgiveness. From now until the midterm election, progressive Democrats in Congress likely will pressure Biden to enact wide-scale student loan cancellation through executive action. Some members of Congress say that Democrats will lose the midterm elections if Biden doesn’t enact wide-scale student loan cancellation. To date, Biden has called on Congress to cancel up to $10,000 of student loans through legislation. That said, White House Press Secretary Jen Psaki says that Biden is still considering wide-scale student loan cancelation.
Are you prepared for student loan repayment? The student loan payment pause is only temporary, so now is the time to prepare a game plan to pay off student loans.
Here are some smart ways to save money on your student loans: