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Since the deferral period for federal student loans expires in October, most borrowers have to start repaying their student loans for the first time since March 2020 – provided this deadline is met. But will the moratorium be extended again? Here’s a look at the latest information on student loan relief.
Will the student loan indulgence be extended beyond October?
The chances of an extension of the forbearance have improved lately, although there is no guarantee that it will. As reported by Politico, U.S. Department of Education officials recommend that the White House extend the moratorium through January 2022, although that stance has not yet been publicly announced.
And last week the Democratic Sens. Elizabeth Warren and Edward J. Markey sent one Letter to President Biden urge an extension of the moratorium until at least March 31, 2022. The letter points to ongoing problems with the servicers – as the servicers say they are still understaffed – along with the ongoing financial plight for borrowers, citing a June poll 90% of respondents said they would not be ready to resume loan payments in October.
There is also the recently announced withdrawal of service providers Granite State and FedLoan from the state student loan program on January 1, 2022, which will affect around 10 million borrowers. As Forbes points out, was the management of transfers by contractors of the Ministry of Education in the past chaotic, with widespread problems such as lost records and missing payments. By postponing the moratorium to the end of the year, the service employees would have more time to prepare.
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What about student loan issuance?
Biden is waiting for a memo from the Ministry of Education on the legitimacy of the President to cancel student loan debts through executive action. While progressive Democrats have said Biden could “swipe” up to $ 50,000 in student debt, the legality of such a move is is that not clear.
Plus, debt relief is a much more controversial issue that probably won’t pass Congress without removing the filibuster. Criticism of lump-sum debts Relief says it’s unfair to people who don’t go to college, that it doesn’t address rising tuition costs, and that any forgiveness should be more focused on those on lower incomes.
In the meantime, President Biden has $ 3 billion in student loan canceled by topping up existing credit relief programs through executive action. The Ministry of Education is seek further reforms That should make it easier for distressed borrowers to qualify for student debt relief, but it will likely take up to a year to complete.
Bottom line
While extension seems more likely than debt relief, borrowers should prepare for regular payments starting October – just to be sure. If you can’t make these payments, you should file a claim Income-based repayment plan.
