Is the federal government going to forgive student loans or extend the pause?
Is the federal government going to forgive student loans or extend the pause?
The short answer is that it is currently unknown as of August 1, 2022.
When I hear anything, I will let you know.
The following is an article from the Wallstreet Journal.
Biden Administration Is Ready To Implement Mass Student Loan Forgiveness, As Decision Could Come Any Day
Adam S. Minsky Senior Contributor
WASHINGTON, DC - JULY 28: U.S. President Joe Biden gestures as he delivers remarks on the Inflation ...
The Education Department is reportedly prepared to swiftly implement mass student loan forgiveness — if President Biden decides to approve such an initiative. But so far, Biden has remained undecided. Here’s where things stand.
As first reported by POLITICO, the Education Department has created systems and procedures to move quickly in implementing a broad student loan forgiveness initiative, if and when Biden gives the word. This includes a contingency if Biden imposes income restrictions on student loan forgiveness eligibility, which officials have suggested could be part of any such initiative. Here are some key elements:
Some borrowers whose income information is already on file with the Education Department may be able to get student loan forgiveness automatically, potentially within months of any announcement.
Borrowers who don’t have their income information on file with the Department may be able to quickly self-certify their income on a simple application form, with the Department doing a small number of audits to verify borrowers’ information.
The Education Department is prepared to implement federal student loan forgiveness for nearly any kind of federal loan, including Graduate PLUS loans, commercially-held FFEL loans, and Parent PLUS loans, if Biden approves such broad relief. It’s unclear if Direct loan consolidation would be necessary to qualify.
For borrowers who have loan balances left over following the application of student loan forgiveness, the Department may be able to re-amortize the loan based on the remaining reduced balance, leading to lower monthly payments for some borrowers on Standard, Extended, or Graduated repayment plans.
Of course, none of these details are final — they are plans contingent on President Biden deciding to use executive action to enact broad student loan forgiveness. And the White House has repeatedly said that he has not yet made a final decision.
Biden pledged to support $10,000 in student loan forgiveness for every borrower during his 2020 campaign for president, but he has hedged on using executive action (rather than Congressional legislation) to implement it. Biden has seemingly warmed to the idea in recent months, but he has delayed a final decision. He recently told reporters he would decide before the end of August.
Advocates had been pushing Biden to cancel a larger amount of student debt, and many progressive Democrats had hoped Biden would cancel $50,000 or more for every borrower, with universal eligibility and no income caps. Advocates have warned that imposing eligibility rules could lead to bureaucratic delays, errors, and complications.
But Biden has bristled at universal student loan cancellation. Recent reports suggest that he would be more comfortable with $10,000 in student loan forgiveness, limited to borrowers earning $125,000 per year or less.
Mass student loan forgiveness isn’t the only major student loan decision on Biden’s plate. The ongoing student loan pause — which has suspended payments and interest on most federal student loans for over two years — is set to end in four weeks. Speculation is growing that he will extend the payment pause, but no decision has yet been announced.
Biden will also need to decide whether to extend other expiring student loan relief initiatives, including the popular but under-utilized Limited PSLF Waiver, and a broad IDR Account Adjustment that may dramatically accelerate student loan forgiveness for millions of borrowers.
Biden May Extend Student Loan Pause Into Next Year And Is Considering Other Relief, Including Loan Forgiveness
Do you want to know the best strategies to pay for college and reduce the amount owed for college? Should you consider taking a federal student loan? Give us a call and learn our proprietary strategies. 1-888-237-2087 x2
