Federal student loan payments have been paused over the last two years, and this could continue through September. If you’re interested in learning more about how the federal government is forgiving student loans and debt, keep reading below. There’s important information you should know about.
Current Student Loan Situation
The pause on loan payments officially ends on August 31st, but President Biden and Secretary of Education Miguel Cardona have already hinted that an extension on the pause could continue.
As it stands now, September 1st is when interest charges and monthly loan payments will be required again. President Biden last extended the loan payment pause in April 2022, making it the fourth time loan payments have been stalled since March 2020.
By The Numbers
More than 35 million students are currently in debt to their college, and 7 million are in default. In total, there are close to $200 billion in loan payments that have been paused.
Americans owe an eye-popping $1.76 trillion in public and private student loans, which is the most amount of consumer debt with the exception of mortgages. Let’s take a deeper look into how long students may be able to pause their loan payments.
How Long Could It Last?
Since President Trump first began the pause on student loan payments, President Biden has extended it four times. And even though Biden’s administration signaled that it could end in January 2022, they ended up doing another pause.
Senate Majority Leader Chuck Schumer and other Democrats wrote a letter on the topic, saying “restarting repayment will financially destabilize many borrowers and their families and will cause hardship…”. As a result, September 1st is the new deadline.
Students In Default
Students who have defaulted on their loan payments will be able to have any delinquency forgiven. According to the US Department of Education, their accounts will be returned to good standing.
This is important because students will be able to repair their credit and get access to income-driven repayment programs. In addition to that, programs such as Public Service Loan Forgiveness help out those who work for nonprofit organizations.
Canceling Debt
Biden has said he would support canceling at least $10,000 of federal loans per borrower. But as it stands now, the Department of Education is doing the leg work in terms of pausing and canceling loans.
More than 750,000 people have had their student loans erased, totaling $18.5 billion in forgiven payments. The White House has also made statements that the President would not rule out an executive order that could cancel more amounts of loan payments.
Easing The Burden
The past two years have caused major disruptions in the economy worldwide, making it necessary for the government to ease financial hardships for students. With the continuing delay in student loan payments, it’s possible that millions of Americans can get more relief in the coming months.
