Biden may extend the student loan exemption after September 30th. but there is one serious dilemma…
Here’s what you need to know.
Right now, there are two parallel paths for obtaining student loans. The first is student loan cancellation – about the possibility of large-scale student loan cancellation, at least for some student loan borrowers. However, hopes for a large-scale student loan cancellation do not seem to have been dashed. Given the infrastructure development plan and the lack of news from the Biden administration about a possible timing, the cancellation of the student loan appears to be in limbo. The second – and more immediate option – is the option to extend the student loan exemption after September 30, 2021, when the following conditions expire:
- No federal student loan payments;
- Federal student loan rates are set at 0%; as well as
- No collection on federal student loans in the event of default.
In the absence of an extension of this student loan exemption, federal student loan payments will be made effective October 1, 2021.
Will Biden Extend Student Loan Benefit?
The argument for extending the student loan exemption is clear and goes something like this: Student loan borrowers are still recovering financially from the Covid-19 pandemic, and it is too early for them to pay their student loans. There are other reasons for delaying student loan payments, but this is the main reason. According to a new poll, 90% of student loan borrowers are not willing to pay student loan again from October 1… In this case, the word “ready” can refer to “financially ready” or “psychologically ready”, or both together.
Opponents of extending student loan benefits say student loan borrowers will have no federal loan payments for 18 months. They claim that this amounts to $ 5 billion a month in student loan cancellations, according to the US Department of Education. In total, student loan borrowers will receive Cancellation of over $ 90 billion student loan during the Covid-19 pandemic. This student loan forgiveness in addition to $ 3 billion that Biden canceled after becoming president… Opponents say there are direct costs to extending student loan benefits, even if the Covid-19 pandemic was traumatic in several ways, economic and others.
Student Loan Relief: Biden’s Dilemma
Despite these arguments on both sides, there is an even bigger dilemma that Biden faces with regard to granting student loan benefits. Biden is well aware of the arguments on both sides in favor of easing the situation. On the one hand, providing student loan exemptions will help student loan borrowers face the burden of huge student loan debt arising from the unprecedented pandemic. On the other hand, there is the cost of paying off the student loan – and as noted by the Department of Education – more than $ 5 billion a month. The bigger problem for the president, however, is what the student loan forgiveness symbolizes. Biden is spearheading the economic recovery. From a political point of view, it is difficult to say that the economy is recovering, the number of jobs is large and jobs are being created. Then, at the same time, say that the economy is in such dire straits that student loan borrowers do not have to pay student loans after receiving an 18-month student loan exemption. The messages are contradictory. However, not every decision in Washington is based on political calculations, and supporters of student loan exemptions will argue that people should be above politics. However, it will be difficult for the president to argue that the economy is recovering, but at the same time to say that this is not for borrowers of student loans. This does not mean that Biden will not extend the student loan exemption beyond September 30, because it is possible, but it is something that should put pressure on the Biden administration as it considers the next steps on student loans.
Even if the student loan exemption is extended, remember that this is only temporary… Once payments have resumed, you will still owe the balance of your student loan and your interest rate will be set. This is why it is so important to get your student loans now. Get a student loan game plan. Here are some clever options: