President Joe Biden wants student loan borrowers to do 3 things during student loan relief.
Here’s what you need to know — and what it means for your student loans.
Your federal student loan payments may be paused temporarily through May 1, 2022, but that doesn’t mean you should sit back and relax. Since March 2020, more than 40 million student loan borrowers have enjoyed the following student loan benefits:
- no mandatory federal student loan payments;
- no new student loan interest accrual; and
- no collection of student loans in default.
Biden extended student loan relief for 90 days in response to the Covid-19 pandemic and persistence of the Omicron variant. (What Biden’s latest student loan relief means for your student loans). In announcing the fifth extension of student loan relief from the Cares Act, however, Biden encouraged student loan borrowers to do 3 things with their student loans to prepare for the restart of student loan payments. (How student loan payments will be easier in 2022).
1. Take advantage of the U.S. Department of Education’s student loan resources
The U.S. Department of Education has multiple resources that can help you prepare for the restart of student loan payments. (Here’s how to get student loan forgiveness during the Biden administration). For example, you can learn about income-driven repayment plans, forbearance, deferment and other ways to pay off student loans. You can start on the Education Department website to learn more about student loan forgiveness, student loan consolidation, student loan servicers and student loan default. You can also login to your student loan account through Federal Student Aid (FSA) to check your student loan balance and manage your student loans.
2. Evaluate income-based student loan repayment
Income-driven repayment plans are a good option for federal student loan borrowers who are struggling financially to pay student loans. There are four main income-driven repayment plans: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE) and Income-Contingent Repayment (ICR). Income-driven repayment plans set your monthly federal student loan payment based on your discretionary income, family size and state of residence. It’s possible to get a monthly student loan payment as low as $0. (More student loan relief may be coming). To learn more, contact your student loan servicer. With an income-driven repayment plan, it’s also possible to get student loan forgiveness after 20 years (for undergraduate student loans) or 25 years (for graduate student loans) of monthly student loan payments. If you’re already enrolled in an income-driven repayment plan, make sure to update your income, family size and state of residence at least annually so that your student loan payments reflect your unique financial situation.
3. Explore public service student loan forgiveness
You may not work in public service, but you want to if you want to pay off student loans faster. Congress created the Public Service Loan Forgiveness program in 2007 to help federal student loan borrowers get student loan forgiveness. (Biden won’t cancel student loans before student loan relief ends).To qualify, you’ll need to satisfy several requirements, including, among others, working for a qualified public service or non-profit employer, making 120 monthly student loan payments, enrolling in an income-driven repayment plan. While the public service loan forgiveness program has at one time rejected 99% of applicants, the Biden administration made major changes to the program to help more student loan borrowers get student loan forgiveness. Until October 31, 2022, student loan borrowers can submit a limited waiver to “count” past student loan payments that previously didn’t qualify. The Public Service Loan Forgiveness program is still available, so if this of interest to you, you could consider a career working for a qualfiied public service or non-profit employer. Contact your student loan servicer for more details. (How to qualify for automatic student loan forgiveness).
Will Biden cancel student loans?
Student loan forgiveness advocates may support these 3 things, but they are more focused on Biden enacting wide-scale student loan forgiveness. In Biden’s announcement of the extension of temporary student loan relief, Biden made no reference to student loan cancellation. While it’s possible, don’t count on any wide-scale student loan cancellation. You’re better off financially preparing for the restart of student loan payments and understanding all your options to save money and pay off student loans faster. Here are some popular ways to pay off student loans faster: