New proposal would extend suspension of student loan payments and cancel student loans

This new proposal would extend the student loan payment break and cancel student loans.

Here’s what you need to know — and what it means for your student loans.

Student loans

Sen. Patty Murray (D-WA), chair of the U.S. Senate Committee on Health, Education, Labor, and Pensions (HELP), calls on President Joe Biden to extend the student loan payment pause until at least 2023 and to cancel student loans for borrowers. (However, these Republicans want to end the student loan payment pause).

“This loan system is unacceptable and we can fix it,” Murray said. “When you get a loan to pay for college, you deserve a system that works. It should be easy to sign up for a reasonable repayment plan, no one should end up with a monthly payment they can’t afford, and debt relief shouldn’t require going through a gauntlet of paperwork. That’s not too much to ask – so until we fix our student loan system, the student loan payment pause must continue to provide borrowers with much-needed relief.

(Biden could extend student loan payment break indefinitely)

Student loans: extend the payment pause and cancel student loans

Murray offered a four-point plan to help deliver student loan relief to student borrowers:

1. Give struggling student borrowers a fresh start

First, Murray says student borrowers who were in default before the student loan payment pause began in March 2020 should be returned to good standing. This means that these student borrowers should have their negative credit history erased and should be able to rehabilitate their student loans.

(Explosive Report Claims This Student Loan Service Deceived Student Loan Borrowers)

2. Income-based repayment should be better for borrowers and easier to access

Second, Murray is defending a plan by Senate Democrats that makes income-based reimbursement “more generous and easier to access.” Specifically, the new income-tested repayment plan:

  • be available to all student borrowers;
  • have a simple registration process;
  • prevent student loan debt from increasing too much;
  • cap monthly student loan repayments at a maximum of 10% of discretionary income; and
  • replace existing income-based repayment plans.

(Biden to Forgive $6.2 Billion in Student Loans)

3. Ensure More Student Borrowers Get Student Loan Forgiveness

Third, Murray wants to make sure more student borrowers get student loan forgiveness. For example, Murray says the US Department of Education should extend the deadline for the temporary waiver of civil service loan forgiveness. The Biden administration has made major changes to student loan forgiveness. Now, student loan payments that were previously ineligible for public service loan forgiveness can be counted if a student borrower obtains a limited waiver by October 31, 2022. Murray wants that deadline extended so that more student borrowers can access student loan forgiveness.

(6 Major Changes to Student Loan Forgiveness)

4. Cancel student loans for all student borrowers

Fourth, Murray wants student loan forgiveness for all student borrowers. (Biden could cancel the student loan and suspend student loan payments this year). Interestingly, she is one of the few senators to have called for prioritizing student loan forgiveness for specific constituencies within the larger population of borrowers. For example, Murray would prioritize student loan forgiveness for “those most in difficulty,” including student borrowers:

  • of color;
  • low income;
  • who have been repaying student loans for 20 years; and
  • who left university without a degree or diploma.

(Cancellation of a student loan does not mean what you think it means).

The suspension of student loan payments is scheduled to end after May 1, 2022. While it is possible that student loan relief will be extended, there are no guarantees. Therefore, student borrowers should prepare for the restart of student loan repayments. This includes evaluating all of your student loan repayment options.

Here are some popular ways to save money for your student loans:

Student Loans: Related Reading

Biden to Forgive $6.2 Billion in Student Loans

Biden could extend student loan payment break indefinitely

6 Major Changes to Student Loan Forgiveness

Student loan refinance rates have gotten ridiculously low

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