Expect this for your student loans tomorrow
Updated January 19, 2021
This is what you should expect – and not expect – for your student loans tomorrow.
Here’s what you need to know.
When Joe Biden is sworn in as the 46th president on Wednesday, there are several executive orders he is expected to sign. There can be many changes to your student loans in 2021, and this is what you should expect (and not expect) on the first day of the Biden presidency:
Student Loans: What To Expect
Facilitation of student loans
On the first day of his presidency, January 20, 2021, Biden is expected to sign an executive order granting student loan facilities. There is currently a temporary moratorium on the disbursement of federal student loans until January 31, 2021. Biden is expected to extend the following student loan relief facilities:
- Pause payments on federal student loans
- Stop the accumulation of new federal student loan interest rates
- Cease collection of student loans in arrears
There are two questions about this Student Loan Facilitation Extension. The first question is “How long can I waive a student loan?The Cares Act – the US $ 2.2 trillion stimulus package – included these student loan reliefs until September 30, 2020. President Donald Trump then extended these student loan reliefs twice: first to December 31, 2020 and then to December 31, 2020 January 31, 2021. For example, Biden can extend the student loan relief by three months to April 30, 2021, which is the same three-month extension that Trump introduced last year. A more aggressive approach would be to ease student loan relief up to the age of 30.
The second question is “Are Other Student Loans Eligible?The Cares Act granted federal student loan relief for student loans, but not FFELP loans or Perkins loans. Currently, if you have one of these student loans, you will have to make student loan payments in the normal course. There have been bipartisan efforts to include these student loans in future Student Loan Facilitation, but there is no guarantee Biden will include them in its executive order.
Student Loans: What You Can’t Expect
Termination of the student loan
Biden is not expected to cancel student loans on the first day of his presidency. This does not mean that there have not been any requests to cancel the student loan. These civil rights and community organizations have asked Biden to cancel student loans by ordinance. Senator Elizabeth Warren (D-MA) and Senate Minority Leader Chuck Schumer (D-NY) suggested that Biden should cancel up to $ 50,000 in student loans by executive order for borrowers who are less than $ 125,000 earn per year. Warren, Schumer, and others have argued that the Higher Education Act of 1965 empowers the U.S. Secretary of Education to cancel student loans and that no further authority of Congress is required to cancel student loan debts.
Biden supports student loan cancellation, and Biden wants Congress to cancel student loans immediately. (And Biden suggests three ways to cancel student loans). The key word is “Congress,” which reflects Biden’s feeling that he is unlikely to be able to cancel student loans by regulation. Biden, a former U.S. Senator, likely believes that Congress, rather than the executive, is the appropriate branch of government to get rid of student loan debt. The U.S. Department of Education also issued a non-binding memorandum last week stating that it is illegal for the President (through the Secretary of Education) to cancel student loans for all student loan borrowers. If Congress passes bills either in a stimulus package or as stand-alone legislation, Biden could sign the bill. Before doing this, however, Congress must determine “how much student loan will be canceled” and “who is qualified to cancel student loans”. There are some general principles so far, but Congress has not reached a final consensus on these two student loan cancellation issues. Until then, without any surprises, there will be no cancellation of the student loan until Congress passes law.
This will help you pay off student loans faster
How can you best pay off student loans? While Biden is unlikely to cancel student loans through an executive order, Congress could include student loan cancellation in the new stimulus package. However, although some congressmen proposed removing student loans, the student loans have been removed from the stimulus package to this day. Because of this, it is important to understand your student loan repayment options now if the student loan cancellation does not come. Start with these three options, all of which have no fees: