Biden may extend student loan payment suspension again
President Joe Biden could extend student loan payment break again.
Here’s what you need to know — and what it means for your student loans.
There is potentially good news for student borrowers. White House Chief of Staff Ron Klain said in a podcast this week that Biden could consider extending the student loan payment pause for an unprecedented fourth time. Here are the details:
Student loans: extend the payment break beyond May 1
Will student loan repayments be postponed until 2023?
That’s the question at least some borrowers and student loan advocates are asking. “The president is going to look at what we should do on student debt before the break expires, or he’ll extend the break,” Klain said on the podcast. Pod Save America. Klain’s comments come days after Biden’s first State of the Union address, in which Biden did not mention student loans, student loan forgiveness or student loan forgiveness. Some took the omission of student loans from the keynote as an indication that Biden was not considering any extension of student loan relief.
(Where Biden stands on student loan relief)
As Klain noted, federal borrowers have not been required to make a single student loan payment since Biden has been president. Since March 2020, when Congress passed the Cares Act stimulus package and President Donald Trump signed the bill, student borrowers have enjoyed the following benefits:
- no mandatory federal student loan payments;
- 0% interest rate (no further accumulation of interest);
- no recovery of defaulted student loans; and
- an ability to “count” student loan non-payments toward student loan cancellation requirements
This student loan relief is due to expire on May 1, 2022. Biden has extended the student loan payment break three times since becoming president. Previously, Trump had twice extended this student loan relief. It is important to note that the student loan payment suspension only applies to federal student loans held by the US Department of Education. Therefore, private loans are not included in this temporary student loan relief.
(3 ways to get student loan forgiveness now).
Will your student loans be forgiven?
Along with the question of extending student loan relief is the question of whether your student loans will be forgiven. (6 major changes to student loan relief). Progressives in Congress, including Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA), have pressured the president to forgive up to $50,000 in student loans for borrowers. (Student loan cancellation reduced to $25,000 for borrowers with a new application). Warren argued that the president has existing legal authority under the Higher Education Act of 1965 to cancel student loans through an executive order. However, Biden disagrees and called on Congress to forgive up to $10,000 in student loans for borrowers. Biden said he doesn’t believe he has such executive power unless Congress explicitly grants the president the legal power to cancel anyone’s student loans. (Here’s who won’t qualify for student loan forgiveness). That said, Biden has forgiven more than $15 billion in student loans for borrowers since becoming president. Rather than large-scale student loan cancellation, Biden has focused student loan cancellation on targeted student loan cancellation.
“Right now people don’t have to repay their loans and so I think dealing with the issue of the executive – what we should do about it, what powers do we have, how much we should do about it – that’s something we’re gonna deal with later,” Klain said.
Student loans: next steps
It is important to note that no decision has been made to extend the student loan payment break. As of now, federal student loan payments are expected to resume after May 1, 2022. While Biden may decide to continue the student loan payment pause, student borrowers should assume the status quo. That said, the White House could change course in less than 60 days when student loan repayments resume. Several Republicans have called on Biden to end student loan relief. For example, Sen. Tom Cotton (R-AR) said if Biden extended student loan relief, it would be a “terrible idea.”
Make sure you have a game plan for your student loans. There is no guarantee Biden will extend student loan relief or enact large-scale student loan forgiveness. Therefore, weigh your options. Here are some popular ways to pay off student loans faster:
Here are smart ways to repay student loans: