Big week ahead as Biden decides on student loan forgiveness and student loan suspension extension – Key Details
It’s going to be a big week for millions of student borrowers as President Biden is set to make major decisions on student loan suspensions and large-scale student loan forgiveness.
Here’s what we know.
Student loan break expected to end in 9 days
Most federal student loan repayments have been suspended for more than two years, along with accrued interest and collection efforts. The payment break applies to federal student loans held by the government. The suspension, originally enacted by the CARES Act nearly two and a half years ago, was meant to provide a relatively brief six-month break. But President Trump and then President Biden issued a number of short-term extensions. The break is now in its 29th month.
The most recent extension of Biden’s student loan suspension ends Aug. 31, just over a week away. No previous extension to the break has ever been issued so close to the end date. But given that the Department of Education has ordered its loan officers not to send billing notices to borrowers, the signs point to another extension.
Education Secretary Miguel Cardona said Biden would make an announcement on the student loan suspension within a week. “We know August 31 is a date that a lot of people are waiting to hear from,” he said in an interview on NBC on Sunday. “We talk about it daily, and I can tell you the American people will hear it by next week.”
Biden said he will decide whether to cancel the student loan by August 31
The student loan pause isn’t the only major student loan decision on Biden’s plate. Biden also said he would make a final decision on enacting a broad student loan forgiveness by Aug. 31 as well.
Advocates for borrowers and progressives in Congress have been urging Biden for nearly two years to use executive action and write off large-scale student loan debt “with the stroke of a pen.” But Biden has so far resisted that campaign, opposing large amounts of federal student loan forgiveness and expressing skepticism that he has sufficient legal authority to act unilaterally.
In recent months, however, Biden’s stance appears to have softened once it became clear that Congress would not pass a sweeping student loan forgiveness bill. The Biden administration has hinted that the president is seriously considering some form of large-scale student loan forgiveness initiative, including the use of legal arguments in recent court filings suggesting officials are endorsing a legal theory according to which the existing federal government allows at least some level of student debt. cancelation. Meanwhile, the Department of Education would have already put in place an administrative system to implement the mass cancellation of student loans if Biden decides to continue.
Biden may decide on other student loan cancellation and relief initiatives
While the most important items Biden is assessing are student loan suspension and large-scale student loan forgiveness, Biden must also decide how to proceed with other federal student loan relief initiatives:
- The PSLF Limited Waiver is an initiative that temporarily relaxes rules to extend relief through the Civil Service Loan Waiver Scheme. Lawyers pushed Biden to extend the initiative, which is currently set to end on October 31.
- The IDR Account Adjustment is an initiative designed to provide retroactive credit over the duration of student loan forgiveness for borrowers under federal income-tested repayment plans. The Department of Education has not marketed this initiative as much as it has focused on the limited PSLF waiver, but officials could complete this initiative by January. Borrower advocates are also pushing for an extension of this program.
- A new income-focused repayment plan is also being considered, which could offer borrowers lower monthly payments once the student loan break ends. The Department of Education released a proposal for a new income-based plan last year, but it was widely criticized for its complicated formula and strict eligibility rules that excluded college borrowers and Parent PLUS borrowers.
Further Reading on Student Loans
The Biden administration approved $32 billion in student loan forgiveness, and more is coming — Here’s how to apply
Who qualifies for nearly $4 billion in automatic student loan forgiveness under new Biden initiative
Settlement providing $6 billion in student loan forgiveness removes hurdle: 5 key takeaways
If You’ve Been To These Schools, You May Qualify For Student Loan Forgiveness: Here’s What To Do