Author: Michael Shanks
The Biden office has extended the suspension of federal student loan payments for the eighth time since March 2020.
Secretary Miguel Cardano said on Tuesday that the U.S. Department of Education is prolonging the student loan payment delay until the litigation against the government’s student debt relief proposal (up to $20,000 in forgiveness to millions of students) is resolved.
“@POTUS and I believe it’s harmful and wrong to ask tens of millions of borrowers to resume payments on their student debt when they would be eligible for relief – if not for these meritless lawsuits,” he stated. Cardano further said that the legal disputes will be completed by June 30, 2023, and that student loan payments will resume 60 days after that.
How will the Extension of the Loan Payment Term Affect Borrowers?
Student loan payments, due in January, will now be delayed until June 30 or until the government’s student debt forgiveness proposal is resolved in court.
According to Mike Pierce, the administrative director of the advocacy group Student Borrower Protection Center: “struggling borrowers will be able to keep food on their tables during the holiday season and the coming months,” mainly as the U.S. economy grapples with inflation, growing interest rates, layoffs.
Review your Student Loan Balance and Choose Loan Repayment Option
If you have federal student loans, compare your debt and income to see if it is the best for your financial condition. You can utilize these loan simulators with the Department of Education to determine the best loan payback option for your finances.
It is also helpful to review your present spending and budget and make any required changes to restart payments in the following months.
Borrowers eligible for a refund should contact Farrington immediately if they need to.
You might make hundreds of dollars in interest by putting your return in a high-yield savings account between now and next June.
“By not making that phone contact, borrowers might be losing almost $300 in free money,” Farrington added.
Learn How to Do Save
If your budget permits, be bold and begin saving for your student loan payment each month in a high-yield savings account to ease your way into compensation.
With this approach, you may collect interest on your funds while still having easy access to them when the payment expires. Suppose the government finally forgives some of your debt, you’ll be able to put the savings into your student loan payment or in an emergency fund.
Borrowers eligible for the Public Service Loan Forgiveness (PSLF) program should confirm their job. That is because every month of stopped payments qualifies as a month for PSLF credit, according to Farrington. Visit studentaid.gov to know more about PSLF eligibility.
“This additional time, which is between 9 to 10 months, can put borrowers much closer to even more loan forgiveness,” he said.
Bottom Line
Biden’s student debt forgiveness arrangement initially failed. However, there is still hope that the forgiveness program can come into play, but it solely depends on the court verdict.