Three weeks after the federal student loan payment pause ended, borrowers are still waiting to hear what’s next.
WASHINGTON — With just three weeks until the end of the federal pause in student loan payments, borrowers have been left in limbo as President Joe Biden remains silent on whether he will forgive millions of Americans student debt and whether the payments will end after the moratorium to resume on August 31st.
The White House said Biden would make a decision by the end of August, after the president initially said in April he would announce a decision within “a couple of weeks.”
“If he’s ready to make that decision, we’ll let you know,” White House press secretary Karine Jean-Pierre said during a Tuesday news briefing. Jean-Pierre said “no decisions had been made” on whether to cancel the debt or extend the payment pause.
If Biden doesn’t extend the pause, student loan payments will start again on September 1 and interest rates will start up again.
Federal student loan borrowers have not had to make loan payments since March 2020, when then-President Trump signed the CARES Act into law and suspended payments and interest accrual. Biden has extended the moratorium four times during his presidency.
During the campaign, Biden supported the $10,000 per borrower waiver. But internal negotiations have dragged on for months, while some Democrats are urging the president to do more and Republicans are firmly opposed to any mass debt forgiveness.
While it’s unclear whether Biden will issue widespread debt relief, it’s unlikely the president would resume making required payments so close to the midterm elections and with such little notice to borrowers. In late July, the Department of Education ordered student loan servicers not to contact borrowers about resuming payments, according to The Wall Street Journal and NBC News reported, suggesting an extension of the hiatus.
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When could it come into effect?
According to Politico The Department of Education has drawn up plans for possible widespread debt relief on a scale unprecedented in the history of the federal student loan program.
If Biden gives the green light, the Department of Education stands ready to forgive many borrowers who have filed income information with the agency within weeks, documents obtained by Politico show, such as: B. Borrowers who have already certified their income have income-based repayment schedules. While this applies to several million borrowers, most other borrowers would self-report their income to confirm their eligibility through the federal student aid website, Politico reports.
The plans show that the Department of Education is preparing to allow all types of student loans to be waived, including grad and Parent PLUS loans, Politico said.
Who would qualify?
The White House is considering an income cap for the loan forgiveness. according to the Washington Post. Though nothing has been finalized, The Washington Post reported that the cap under consideration would be $125,000 or $150,000 for single applicants and $250,000 or $300,000 for married couples applying together.
According to CNBC, More than three-quarters of borrowers would likely still qualify for forgiveness under these rules.
Borrowers with private student loans should not experience any relief. Because their debt is held by private companies, these loans are not subject to the federal government’s payment pause or debt forgiveness.
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