Did you know that student loan borrowers in America collectively owe more than what the entire economy of Canada is worth? Josh Mitchell put it best when he said that the current $1.7 trillion student loan debt bubble has been brewing under the surface for at least 60 years, and the problem is only getting worse due to the pandemic.
That’s why student loan forgiveness is likely on the horizon. You may be wondering – Is Biden forgiving student loans? How has the pandemic impacted student loans, and what are the most recent student loan updates you need to know about? Learn all the answers and more below!
What is Student Loan Forgiveness and Forbearance
When someone takes out a loan in order to pay for an education, it makes sense to expect that they’ll be able to pay it back in the future. After all, an investment into an education often translates into better paying positions. It rarely works out like that in reality, though. Now, secondary degrees are an expectation rather than something that will propel you into a successful career. On top of that, the costs of an education far exceed the average income these days. There are very few options for struggling borrowers, though.
Student loan forbearance postpones payments temporarily, while forgiveness eliminates the debt completely.
Who Qualifies for Student Loan Forgiveness
Loan forgiveness sounds fantastic on the surface, but very few people qualify. To qualify, borrowers must have a specific type of federal student loan and make consistent payments for ten years. They may also qualify if they work full-time for a qualifying employer.
Who is Excluded from Biden’s Student Loan Forgiveness Expansion
The pandemic was an unexpected situation that policymakers couldn’t ignore. Thankfully, President Biden student loan forgiveness plans involved temporarily suspending payments and interest on federal student loans. This student loan forgiveness bill 2021 was welcome relief for most borrowers! Not only could borrowers skip payments without penalty, but individuals who were already missing payments had the collection efforts against them halted, too.
This relief only applies to student borrowers who owe the federal government, though. Individuals who hold student loans through private banks are not eligible to enjoy this temporary relief. On these loans, interest will continue to stack up and payments are still due.
This measure won’t last forever, though. So, when do student loans resume? Beginning on February 1, 2022, everyone’s student loan payments will be due once again. Borrowers still have time right now, though, to act if they don’t think they can afford payments in 2022. Many lenders offer income-based repayment plans.
Other Recent Student Loan Forgiveness Developments
That’s not all that President Biden is doing with student loan debt, though. There’s been a massive wave of support in favor of loan forgiveness, so more government officials have been willing to make moves to help struggling borrowers.
In October, the U.S. Department of Education made some changes to the Public Service Loan Forgiveness program that will remain in place until October of 2022. These changes shorten the amount of time that borrowers who have already consolidated their loans would have to make payments on their loans before qualifying for forgiveness. This change could potentially forgive the debt of 22,000 borrows to the tune of $1.7 billion.
Student Loan Consolidation
So, what is student loan consolidation? Consolidation means that multiple loans can get combined into one loan, which means you’ll only have one single monthly payment. This type of option is a great idea for individuals who have several loans. Why? In most cases, it will end up giving you a much longer time to repay your loans, and it will allow you to pay less each month. Further, borrowers may experience interest rate discounts and principal rebates if they decide to consolidate.
If you’re unable to make payments and you don’t think your situation will change in the near future, then consolidating your student loans might be a good way to get out of a default situation. Your loans will go back into ‘good’ standing, which will be good for your credit score.
What to Know About the Student Loan Forgiveness Bill 2021
Student loan forgiveness sounds great on the surface, but the truth is that most Americans don’t qualify. Further, even filing for bankruptcy isn’t enough to get your student loan debt discharged. That’s why most Americans who owe a significant amount in student loans must look for other options, like loan consolidation.
If that’s what you’re looking to do, then we can help. Check out if you qualify for our debt relief programs now by reaching out to one of our representatives.
Gabriel Gorelik paves the way for customer service and operations at United Settlement. He is passionate about numbers and holds a strong belief in helping anyone with their debt. Before United Settlement, Gabriel received his BS in Finance & Economics from Brooklyn College. After graduation, Gabriel went on to build his first financial services company where he managed thousands of accounts for business and consumer clients. He understands the importance of client satisfaction, professionalism, and exceeding expectations.