Student loan relief for 1 million more borrowers – after Biden cancels $ 2.3 billion in student loans
Congratulation to 1 million additional borrowers who will get student loan relief.
Here’s what you need to know.
In response to the Covid-19 pandemic, President Joe Biden to grant student loan relief to another 1.1 million student loan borrowers. This is Biden’s third student loan announcement in recent weeks, and comes after Biden has already enacted $ 2.3 billion in student loan cancellations. Now, Biden will help student borrowers with FFELP loans that have defaulted on their student loans. These borrowers will receive similar student loan relief under the Cares Act, the $ 2.2 trillion stimulus program that provides several protections to federal student loan borrowers through September 30, 2021, including:
- No federal student loan payment;
- No interest on federal student loan payments; and
- No garnishment of wages, social security and tax refunds for the collection of student loans for those in default.
Previously, only borrowers with federal student loans owned by the US Department of Education were eligible for such student loan relief. In addition, the new stimulus package – the 2021 US bailout – didn’t stop creditors from taking your stimulus check to pay off the debt. Therefore, most Federal Family Education Loan Program (FFELP) loans have been excluded from student loan relief since early 2020. Why? Although FFELP loans are considered federal student loans, they were issued before 2010 by financial institutions and most of these student loans are owned by banks and private investors (not the federal government).
“At a time when many student borrowers face economic uncertainty, we are ensuring that the relief already given to borrowers on loans held by the [U.S. Department of Education] is available to more borrowers who need the same help so they can focus on meeting their basic needs, ”said US Secretary of Education Miguel Cardona. “Our goal is to enable those borrowers who are struggling to default to obtain the same protections previously made available to tens of millions of other borrowers to help them overcome the uncertainty of the pandemic.”
Student loan relief: not everyone is eligible
Not everyone will be eligible for this student loan relief, However. First of all, you must have a FFELP student loan. Second, your FFELP student loan must be in arrears. Importantly, while 1 million student loan borrowers qualify, the latest statistics on student debt show that approximately 11 million student loan borrowers collectively owe $ 246 billion in FFELP student loans. This means that nearly 10 million student loan borrowers who have FFELP student loans will not receive any student loan relief. Why? Answer: Their FFELP student loans are not in default. America shared different reactions to the cancellation of a student loan and student loan relief. For example, critics of this student loan relief plan claim that too few student borrowers will be helped, and it only boils down to partial student loan relief. Last year, to address this same issue, Representative Elise Stefanik (R-NY) introduced bipartisan legislation – the Fairness in Student Loan Relief Act – that would make all student loan borrowers with loans. FFELP eligible for student loan relief under the CARES Act. However, Congress failed to pass this legislation, leaving millions of student borrowers frustrated and without student loan relief. How Can You Get Student Loan Relief? If you have FFELP loans, you can consolidate them with the federal government into a direct consolidation loan so that you are eligible for student loan relief even if your student loans are not in default.
Is this student loan relief considered a student loan cancellation?
It is not exactly student loan cancellation. Like other student loan relief through the Cares Act and then by Order in Council, this is temporary student loan relief until September 30, 2021. In the absence of renewal or extension , student loan payments will be due on October 1, 2021, and interest will begin to accrue. from this date. That said, in March, Biden canceled $ 2.3 billion in student loans for more than 110,000 student borrowers. First, Biden canceled $ 1 billion in student loans for 72,000 student borrowers. Then he canceled an additional $ 1.3 billion in student loans for 41,000 borrowers with total and permanent disability. This new student loan relief will help 10 times as many student loan borrowers as 110,000 student loan borrowers who have had a student loan canceled. While student loan relief is different (permanent cancellation or deferral), student loan relief for FFELP student loan borrowers reinforces Biden’s commitment to providing student loan relief on a targeted and piecemeal basis. (rather than one-time large-scale student loan relief.).
Student loan cancellation: next steps
Senate Majority Leader Chuck Schumer (D-NY) and Senator Elizabeth Warren (D-NY) want Biden cancel student loans up to $ 50,000 for student borrowers who earn less than $ 125,000 per year. White House Press Secretary Jen Psaki said on Tuesday that Biden has do not changed its position on student loan cancellation. Biden still wants Congress to immediately write off $ 10,000 in student loans (implying that Biden won’t write off student loans by executive order). Having said that, Psaki said Biden considers his options on student loans. The next question is whether the Biden administration will provide student loan relief to all FFEL student loan borrowers. If so, 10 million more borrowers could get their student loans suspended. While not the same as student loan cancellation, it could provide student loan relief for student borrowers who were not included in the stimulus package. At this time, it seems unlikely that those 10 million student loan borrowers will get full student loan relief. For now, the Biden administration seems focused on targeted student loan relief, and in this case, it’s only for some student borrowers facing default.
As politicians in Washington debate the future of student loan cancellation, the next step for you is to take control of your student loans. For all student loan borrowers, make sure you are fully informed about the repayment of the student loan. Here are some smart options to consider to save money: