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It is not clear what the Biden administration will do about the federal student loan moratorium that has been in place for more than two years.
Over 44 million student loan borrowers are without a clear direction as to what's supposed to happen next, despite rumors of student loan forgiveness and questions about the possibility of extending the moratorium further into 2022,
If you have student loans, the next few weeks could be crucial if you don't pay them off by the August 31st deadline.
Millions of American students were given relief when the Department of Education froze all federal student loan payments at the start of the Covid-19 epidemic.
Fast forward to where we are today, with record-high inflation burdening the wallet of so many and some members of Congress calling for mass student loan forgiveness to aid in the economic recovery.
American voters seem to be divided on the issue of student loan forgiveness, with a recent YouGov survey showing that a majority of respondents either support or oppose the idea.
The Biden administration is aware that student loan forgiveness is likely to have an impact on the upcoming election. There is a chance that there will be a decision before the deadline.
If you have federal student loans, here are a few things to think about.
When it comes to student loan forgiveness, there is a big political divide. The real issue is within the limits of the president's power.
President Joe Biden was unsure if he could sign away student debt even though he promised to eliminate federal student loans for qualified Americans. Nancy Pelosi stated last year that he doesn't have that ability. The Republicans have refused to allow any student loan forgiveness plans to be brought forth by the Democrats.
Without any distinctive action taken yet nearly 18 months into the Biden presidency, student borrowers are left wondering if loan forgiveness will ever come to fruition - if any executive action is taken, it will likely be met with court challenges as well
Public Service Loan Forgiveness was created to help those who went on to work in federal, state, local, tribal government or military roles, as well as for the Peace Corps, AmeriCorps, and certain not-for-profit organizations.
Up to 98% of applicants have been rejected, though the U.S. Department of Education is working to improve the program. The Biden administration is trying to improve the program and make it easier for more borrowers to clear their debts.
In the past, applicants had to have a loan product and make payments for at least 120 months in order to be eligible for student loan forgiveness. You can apply for credit for past periods of repayment on loans that would not qualify for the program if you do so by October 31. The Federal Student Aid website has more information.
The Federal Reserve has been trying to control inflation by raising interest rates. Loan products such as mortgage, student loans, credit cards and auto loans are more expensive because of higher interest rates.
The interest rates on federal student loans are currently zero, but will return to normal after August 31st.
The average student loan interest rate is 5.8% according to the Education Data Initiative. If you refinancing your student loans, you will lose federal protections and miss out on any help from any federal agency. Wait until there is a decision on the federal student loan moratorium before you consider refinancing your federal loans.
If you are still not eligible for a student loan forgiveness program, you may want to consider remortgaging your student loans with a personal line of credit. Your loan balance can get out of control if your interest rate is not lowered.
Some of our favorite student loan refi providers are listed.
The future of student loan repayment is uncertain and borrowers aren't being given much information
The Department of Education will continue to assess the impact of the Covid-19 Pandemic and the economy on student loan borrowers. We will let borrowers know when the payment pause ends.
If you have federal student loans, the best course of action is to assume your payments will resume, if they do. If the government moves forward with a loan forgiveness plan or continues the moratorium, you will be prepared for that as well.
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