President Joe Biden is expected to decide whether to extend the student loan payment pause and enact large-scale student loan forgiveness today.
Here’s what you need to know — and what that means for your student loans.
Student borrowers are eager to know what the future holds for their student loans. Will the student loan payment break be extended? Will your student loans be forgiven? It’s up to the president to decide.
Student loan payment break: Borrowers need to know when payments are due
(A new proposal would extend the student loan payment break and cancel student loans). Federal student loan repayments have been suspended since March 2020. At the start of the Covid-19 pandemic, Congress granted borrowers historic student loan relief, including no mandatory repayment of federal student loans. President Donald Trump and Biden have collectively extended this temporary student loan payment pause five times. That means no student loan borrower has been forced to make federal student loan payments since Biden was president. (Explosive report claims this student loan officer misled student borrowers). Now there are rumors that Biden could extend the student loan payment break for an unprecedented sixth time. Biden is expected to announce today whether he will extend the student loan payment pause or if student loan payments will resume after May 1, 2022. With approximately one month remaining until the scheduled restart of student loan payments, student borrowers have need certainty anyway. Otherwise, it is difficult for them to plan their financial future. (Republicans want to end student loan payment pause). White House Chief of Staff Ron Klain hinted Biden could extend relief. The U.S. Department of Education has also asked student loan servicers to stop notifying student loan borrowers about the restart of student loan repayments on May 1. However, the president has not commented publicly and borrowers may be uncertain. It’s time to remove the speculation so borrowers can plan accordingly.
(Biden could extend student loan payment break indefinitely)
Student loan cancellation: will your student loans be cancelled?
While Biden has clear executive authority to extend the student loan payment pause, Biden lacks clear legal authority to enact large-scale student loan forgiveness. (Student loan cancellation and student loan payment suspension are confusing. Here’s what to know). Progressive Democrats in Congress such as Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) argue that Biden has existing legal authority from the Higher Education Act of 1965 , which they claim empowers the U.S. Secretary of Education. to enact large-scale cancellation of student loans of any amount for an unlimited number of student borrowers. Others, including Biden and House Speaker Nancy Pelosi (D-CA), say only Congress can enact large-scale student loan forgiveness. Biden canceled $17 billion in student loans, the most of any president in US history. Last week, Biden announced plans to forgive $6.2 billion in student loans.
Biden should definitely tell student borrowers if only Congress can cancel student loans. He certainly suggested many times that he didn’t think he had the power to do that. However, the White House is still locked in a debate with proponents of large-scale student loan forgiveness, which has confused student borrowers. The best way to clarify this disconnect is to clearly state your plan. The president may announce a plan to enact large-scale student loan forgiveness. Alternatively, the president can declare that he has no legal authority, will not enact large-scale student loan forgiveness, and Congress will have to act. Or, the president can cancel student loans for borrowers who are in financial difficulty, such as low-income people, those affected by the Covid-19 pandemic, or student borrowers who are in default or default. Again, clarity for student borrowers is paramount. Otherwise, some student borrowers expect student loan relief when it may never come. This can affect their ability to make financial decisions and other life choices.
(Here’s who won’t qualify for $6.2 billion in student loan forgiveness)
Student loans: final thoughts
Student loan payment suspension and student loan cancellation are simple decisions for some, but complex and multifaceted decisions for others. There are certainly competing political, financial, political and other implications related to these decisions. The sooner student borrowers know what to expect, the sooner they can make critical financial choices for their future. Whatever the president decides, leading with transparency and urgency will help avoid confusion and uncertainty.
Currently, student loan repayments will resume soon. Here are some popular ways to save money on your student loans: