Borrowers will have to make payments no earlier than October 1, which will extend the already unprecedented pause in payments by eight months.
When the economy began to stall in March in response to the pandemic, Congress passed a massive bailout bill that automatically suspended student loan payments and abolished interest. The benefit originally expired in September but was extended by Trump
administration until January 31st.
Both the pause in payments and the waiver of interest are automatic, but only apply to federally owned loans.
This covers approximately 85% of all federal student loans, including what are known as direct federal loans and PLUS loans, that parents borrowed on behalf of their children. It does not include some federal loans that are guaranteed by the government, but do not technically belong to them. As a rule, they were paid before 2010.
The balances were frozen in March 2020, but borrowers are allowed to continue making payments. Those enrolled in a government service loan forgiveness payment plan still get a loan
as if they kept paying while they were still working full time for suitable employers.
Pressure for large strokes
Progressive Democrats are already pressuring Biden to go ahead and write off billions of dollars in student loans in full. Democrat Senate Leader Chuck Schumer and Massachusetts Democrat Senator Elizabeth Warren have called for a $ 50,000 student loan debt write-off for each borrower, arguing that it will bring relief to millions of people suffering from the pandemic, boost the economy and help close racial wealth. gap.
Warren argued that the secretary of education has the power to revoke federal student loans. memo
from the lawyers of the Harvard Legal Services Center and its Predator Student Lending Project.
Former education minister Betsy DeVos has recently been strongly opposed to Democratic proposals for debt cancellation. criticizing
politicians for promoting “the truly insidious idea of distributing government gifts” in their speeches at the federal student assistance conference.
But Biden may be reluctant to write off the debt unilaterally and would prefer the move to be approved by Congress. This would be an unprecedented move that may not garner support from more moderate Democratic members. BUT study
The Committee for a Responsible Federal Budget found that eliminating student debt would give relatively little boost to the economy, and that much of the relief would go to those with higher incomes, who tend to have more debt.
During his campaign, Biden called for the cancellation of $ 10,000 per borrower. On Tuesday, Brian Deese, his election head of the National Economic Council, said he continues to support Congress in passing legislation to do so.
Biden did not include student debt cancellation in $ 1.9 Trillion Aid Plan
it unveiled last week. But he is pushing for it in a second economic bill, which he is expected to introduce in February, which will focus on economic recovery.
The Biden administration may be more likely to unilaterally expand more targeted loan forgiveness programs that already exist, such as one that offers aid to students who have been defrauded by commercial colleges. There are thousands of borrowers
who have applied for assistance under this program but have waited years to find out if they are eligible for
DeVos has suspended consideration of the claims.