Borrowers don’t have to make payments until October 1 at the earliest, extending the already unprecedented payment hiatus by eight months.
When the economy began to shut down in March in response to the pandemic, Congress passed a comprehensive relief bill that automatically suspended student loan payments and waived interest. The service was originally supposed to expire in September, but has been expanded by the Trump
Administration until January 31
Both the pause in payment and the waiver of interest take place automatically, but only apply to loans held by the federal government.
That covers about 85% of all federal student loans, including what are known as federal direct loans and PLUS loans that parents took out for their children. It excludes some federal loans that are guaranteed but not technically held by the government. These were usually paid out before 2010.
The balances were frozen in March 2020, but borrowers are still allowed to make payments. Those who signed up for the public service lending payment plan will still be credited
as if they continued to pay while they were still working full-time for skilled employers.
Pressure for larger trains
Progressive Democrats are already putting pressure on Biden to grow taller and cut billions of dollars in total student loan debt. Senate Democratic Chairman Chuck Schumer and Massachusetts Democratic Senator Elizabeth Warren have called for $ 50,000 in student loan debt relief per loophole borrower.
Warren has argued that the Secretary of Education has the power to cancel federal student loans, a claim that comes in a memo
of attorneys at the Harvard Legal Services Center and its predatory student loan project.
Former Education Minister Betsy DeVos recently vigorously opposed the Democratic proposals for debt relief criticize
Politicians who promoted “the really insidious idea of giving by the government” in their statements at a federal conference for student aid.
But Biden may be reluctant to unilaterally scrap the debt and would prefer the move to be approved by Congress. It would be an unprecedented move and one that may not have the support of more moderate Democratic Party members. A to learn
from the Federal Responsible Budget Committee noted that student debt relief would mean relatively little boost to the economy and that most of the relief would go to those with higher incomes who tend to have more debt.
During his campaign, Biden requested the cancellation of $ 10,000 per borrower. On Tuesday, Brian Deese, his election as chairman of the National Economic Council, said he would continue to support Congress in passing a bill that would do so.
Biden does not have debt relief for students in a. recorded $ 1.9 trillion relief plan
he revealed last week. But he is pushing for it in a second economic draft, which he is expected to present in February, which will focus on economic recovery.
It is more likely that the Biden government will expand unilaterally targeted lending programs that already exist, such as the one that provides relief to students who have been scammed by for-profit colleges. There are thousands of borrowers
who applied for assistance under this program but waited years to find out if they were
DeVos has stopped processing the claims.