Outstanding federal student loans now total $1.6 trillion held by 43 million borrowers. Are you wondering what the Biden administration is doing about student loan repayment for people with high loan amounts and low income? Perhaps you want to know did student loans get forgiven. We break down who is eligible and what the hold up is.
When do student loan payments resume?
As of late June 2023, the Supreme Court ruled out President Joe Biden’s proposal to forgive $441 billion in federal student loan debt. With no Biden loan forgiveness plan in place for millions of borrowers, this means they MUST resume monthly student loan payments starting in October 2023.
Help For Student Loan Debt
You can apply for student loan forbearance or deferment which will put your payments on pause.
During this time, interest on federal subsidized loans may NOT accrue, while interest on unsubsidized loans and other types of loans WILL continue to accrue. The time when your student loan resumes is based on your student loan servicer.
In forbearance, interest continues to accrue on all types of federal student loans, including both subsidized and unsubsidized loans. Please keep in mind that this is a short-term financial solution to your monthly payments, but can be a powerful tool to use.
Will Biden forgive student loans?
President Joe Biden is doing many things in congress to address student loan debt. After the supreme court’s June 2023 decision, Biden said, “The fight is not over.”
Who is eligible for student loan forgiveness?
Only people who work in public service or specified professions are eligible for loan forgiveness. While the President has expressed his support for student loan forgiveness, Biden will need support from Republicans in congress to achieve his goals.
Your student loan can be cancelled if your balance meets certain criteria and if your income falls within the qualifying range. You also have a good chance of the debt being cancelled if you attended a public college or university.
According to a 2023 legal syllabus, “Borrowers with eligible federal student loans who had an income below $125,000 in either 2020 or 2021 qualified for a loan balance discharge of up to $10,000. Those who previously received Pell Grants—a specific type of federal student loan based on financial need—qualified for a discharge of up to $20,000.”
When Will Supreme Court rule On student loan forgiveness?
The legal document also states, “The issue presented in this case is whether the Secretary has authority under the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act) to depart from the existing provisions of the Education Act and establish a student loan forgiveness program that will cancel about $430 billion in debt principal and affect nearly all borrowers.”
It also states that, “Under the HEROES Act, the Secretary “may waive or modify any statutory or regulatory provision applicable to the student financial assistance programs under title IV of the [Education Act] as the Secretary deems necessary in connection with a war or other military operation or national emergency.”
How To Repay Your Student Loans
If you have a substantial amount of student loans it can seem like an insurmountable task to repay them, but it is possible. You’ll need to become committed to repaying your debt and exercise discipline.
Reduce Your Cost of Living
Save money by living with family, friends, or getting a roommate while you pay off your debt. You may even consider moving to a less expensive city.
Take a second job
If you are able to work more hours, the extra money could help you knock out your student loan debt thousands of dollars at a time.
Invest first
You may be able to use some of your capital to purchase an investment that will mature within your forbearance or deferment period.
This could be a rental property, stocks, or a crypto investment. Once matured. Use the money to pay your debts.
Set up automatic payments
If your payments are on auto pilot you will find that the debt is being reduced over time without you having to constantly monitor your payments.
Pay the smallest loans first
Many people are carrying multiple loans in various amounts. Eliminate the monthly payment for the smallest ones first to free up more of your money or generate savings.
Pay more than the minimum if possible
Put any extra money toward your student loan. If you receive a tax refund, a cash gift, sell a car, or receive an inheritance, you could find yourself out of debt in no time.