President Joe Biden will announce his decision on suspending student loan payments this week.
Here’s what you need to know — and what it means for your student loans.
US Education Secretary Miguel Cardona confirmed on Sunday that Biden will announce this week whether he will extend the student loan payment suspension for a record seventh time. The student loan payment pause ends Aug. 31, 2022, but the Biden administration has been silent on next steps for student borrowers. “We know August 31 is a date that a lot of people are waiting to hear from,” Cardona told Chuck Todd on NBC’s Meet The Press. “We talk about it daily, and I can tell you the American people will hear it by next week.”
Suspension of student loan payment
In response to the Covid-19 pandemic, Congress instituted the student loan payment pause in March 2020. Through the Cares Act – the $2 trillion stimulus package – Congress passed historic loan relief students, including:
- no mandatory federal student loan payments;
- 0% interest rate on federal student loans; and
- no collection of defaulted student loans
President Donald Trump has extended the student loan moratorium twice and Biden has extended it four times. Student loan borrowers have not been required to make a single federal student loan payment since March 2020, which includes the entire term of Biden’s presidency.
Student loan forgiveness: Biden could announce decision this week
In addition to a possible extension of the student loan payment pause, Biden could also announce his decision on large-scale student loan forgiveness this week. There are at least three reasons why Biden could extend the student loan payment pause and enact large-scale student loan forgiveness. Leaked documents from the US Department of Education show a proposed $10,000 student loan forgiveness for all federal borrowers earning up to $150,000. However, there is no guarantee that Biden will support this proposal. Republicans also released a blockbuster plan on student loan forgiveness that offers an alternative vision for the future of student loans. More than 40 million student borrowers are eagerly awaiting Biden’s decision on student loan forgiveness. However, the Biden administration has remained relatively silent on whether the president plans to implement a broad student loan cancellation.
Student loans: next steps
Expect Biden’s decisions on both student loan forgiveness and student loan payment to stall overnight. Progressive Democrats want Biden to extend the student loan payment break and enact $50,000 in student loan forgiveness. Congressional Republicans oppose any large-scale student loan forgiveness and want student loan repayments to resume immediately. What will Biden do? Regardless of the president’s decision, most student borrowers will still need a student loan repayment game plan. Make sure you understand all of your options for repaying your student loans. Here are some great ways to save money on your student loans: