Student loan payment break: 5 questions
President Joe Biden has extended student loan relief for the 4th time. Let’s answer your main questions.
Here’s what you need to know.
Now that Biden has extended the student loan payment break, you might be wondering what that means for your student loans. Here are 5 major questions that student borrowers may ask themselves:
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 an additional four months of student loan relief. As of March 2020, student borrowers have not been required to pay federal student loan repayments and have not been charged new interest on their federal student loans. Collectively, student borrowers have saved $5 billion per month on their student loans since March 2020. Through student loan relief, the Federal Reserve estimates that student borrowers have saved $195 billion on their student loans. (Biden could extend the student loan payment break indefinitely.)
2. Will the student loan payment break be extended again?
The student loan payment break 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, signed by President Donald Trump, provided historic student loan relief. Trump extended this student loan relief twice during his presidency. Biden has extended this student loan relief six times. Given the November 8 midterm elections, Biden could extend the student loan payment break for the rest of 2022. However, there are no guarantees. For now, student borrowers should prepare to resume student loan repayments from September 1, 2022. (The new proposal would extend the 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 only applies 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 which are not owned by the US Department of Education. Likewise, private student debt is not included in this student loan relief. If you are struggling to repay your private debt, contact your student loan officer to discuss potential student loan repayment and forgiveness options. (Student loan cancellation and student loan payment suspension are confusing. Here’s what to know).
4. Can I make optional payments on my student loan?
You may be wondering if you can make optional payments on your student loan during the student loan payment break. (Student loan payment break: Everything Biden said). If you can’t afford to pay off a student loan right now, you’re not alone. However, if you can pay any amount for your federal student loans, it is financially advantageous. (5 options for student loan relief). Why? Currently, interest rates on federal student loans are 0%, which means there is no new accrued interest. Every student loan repayment dollar will first reduce interest on legacy student loans. Then, once you’ve paid off the interest, every extra dollar will directly reduce your student loan principal 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 be forgiven?
Will your student loans be forgiven? This is the question everyone is asking. (Here’s who won’t qualify for $6.2 billion in student loan forgiveness). Biden has canceled $17 billion in student loans since becoming president. However, Biden has focused on targeted student loan cancellation rather than large-scale student loan cancellation. Between now and the midterm elections, progressive Democrats in Congress will likely pressure Biden to enact large-scale student loan forgiveness through executive branch action. Some members of Congress say Democrats will lose the midterm elections if Biden does not enact large-scale student loan forgiveness. To date, Biden has called on Congress to cancel up to $10,000 in student loans through legislation. That said, White House press secretary Jen Psaki said Biden is still considering large-scale student loan cancellations.
Are you ready to repay your student loan? The student loan payment pause is only temporary, so it’s time to prepare a game plan for paying off student loans.
Here are some smart ways to save money on your student loans: