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With the White House yet to release any official extension of the student loan repayment moratorium and the September 1 repayment start date fast approaching, lenders have no other choice. than to go ahead and assume that students will start repaying their outstanding loans early next month.
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Speaking on a SoFi earnings call last week, CEO Anthony Noto provided an update on his company’s demonstrated resilience and “SoFi’s ability to generate another record quarter of revenue”. . However, as Business Insider reports, it was his company’s chief financial officer who said what everyone thought.
“Our outlook also assumes that the federal student loan payment moratorium will last through January 2023, which would result in a benefit at the end of the fourth quarter of 2022 based on the trend seen in 2021,” said Chris Lapointe, CFO of SoFi, on the call.
SoFi, one of the largest private lenders, has previously lobbied Congress to resume paying student loans and in March Noto wrote a blog post titled “Our Recommendation for President Biden” dealing with the reimbursement issue.
“If the government unnecessarily extends the broad moratorium for a fourth time, not only will it add to the country’s inflation woes and unnecessarily hand over to the wealthy who are willing and able to repay their debts, but it will severely disrupt people’s ability to make long term financial plans,” he wrote.
In response to the COVID-19 pandemic, President Joe Biden extended the moratorium on April student loan payments through August 31, 2022. Most federal student loans and their interest rates have been suspended since March 2020.
Student loan forgiveness has been a hot topic throughout 2022, but discussions are heating up each time the latest federal student loan moratorium nears its end date. According to a White House ShortBiden has promised a decision on student loans “by the end of August,” but until that happens, expect an intense debate to escalate over what to do with the loans. 44 million Americans burdened with $1.7 trillion in student loan debt.
In June, the Biden administration was finalizing details to announce sweeping federal student loan forgiveness legislation. As CNBC reported, the president wanted to spend $321 billion to forgive $10,000 of each student’s loan and completely eliminate a third of all current student loans. Since then, there has been relative silence on the matter.
Many Democrats and loan forgiveness supporters would like to see Biden extend his payment obligations through at least the end of the year. However, most want a more substantial elimination of loans and an unprecedented reform of the current federal student loan system.
Most Republicans and financial lenders oppose a new extension and a revamped system of student loan forgiveness, saying the moratorium, as Sen. Tom Cotton (R-Arizona) tweeted in April, ” is an insult to all Americans who have paid their debts responsibly.” by The Daily Mail.
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When campaigning as a presidential candidate, Biden promised to forgive $10,000 in student loan debt per borrower. We will soon know if the president will continue to delay the fulfillment of this promise. Whichever direction he decides to move in, you can bet for many it won’t be the right one.
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