WTF Continues to Provide Federal Student Loan Assistance?
Since the federal student loan grace period expires in October, most borrowers will have to start paying off their student loans for the first time since March 2020 if that deadline is met. But will the moratorium be extended again? Here is the latest news on student loan forgiveness.
Will the student loan deferral be extended in October?
Chances of an extension of abstinence have recently increased , although there are no guarantees that this will happen. According to Politico , US Department of Education officials are recommending that the White House extend the moratorium until January 2022, although this position has not yet been publicly announced.
And last week Democratic Senator Elizabeth Warren and Edward J. Markey sent a letter to President Biden calling for an extension of the moratorium until at least March 31, 2022. The letter points to ongoing problems with service personnel – as service providers say they are still understaffed – along with ongoing financial difficulties for borrowers, citing a June survey in which 90% of respondents said they were not ready to resume loan payments in October.
Also recently announced was the withdrawal of service companies Granite State and FedLoan from the federal student loan program effective January 1, 2022, affecting approximately 10 million borrowers. As Forbes notes , servicing the Ministry of Education contractors’ translation has historically been chaotic , with widespread problems including lost records and missed payments. Moving the moratorium to the end of the year will give maintenance personnel more time to prepare.
What about student loan forgiveness?
Biden is awaiting a memo from the Department of Education on the legality of the president forgiving student loan debt through executive action. While progressive Democrats claim that Biden can write off student debt of up to $ 50,000 “with a flick of the pen,” the legality of such a move is less clear .
In addition, debt forgiveness is a much more contentious issue that is unlikely to go through Congress without removing the pirate. Critics of total debt cancellation say it is unfair to people who do not go to college, that it does not address rising tuition costs, and that any forgiveness should be more targeted at people on lower incomes.
Meanwhile President Biden wrote off the debt of student loans at $ 3 billion , strengthening existing programs to facilitate loans due to actions of the executive power. The Ministry of Education is pursuing additional reforms that should make it easier for problem borrowers to qualify for student debt relief, but they will likely take up to a year to complete.
Bottom line
Although an extension seems more likely than a debt write-off, borrowers should prepare for regular scheduled payments starting in October just in case. If you are unable to make these payments, consider applying for an income- driven repayment plan .