Since President Joe Biden took office in January, the Education Department has paid off about $ 9.5 billion in student loan debt for more than 563,000 borrowers. The measures apply to those who qualify for a closed school discharge, a total and permanent disability (TPD) discharge and the borrower’s repayment defense program.
But with 45 million Americans owing more than $ 1.7 trillion in student loan debt, the vast majority of borrowers are still waiting to see if they have some of their college debt canceled.
Biden has campaigned to forgive up to $ 10,000 in student loan debt per borrower, but passing this legislation as president has proven difficult. President said he wants Congress to meet to cancel student loan debt rather than using executive action to do so.
Read on to learn more about canceling student loans under Biden’s education department and what you can do if you don’t qualify. Borrowers who are struggling to repay their student loans have options, such as signing up for an income-based repayment plan and lowering their monthly payments with their student loan refinancing.
If you do decide to refinance your student loan debt, be sure to compare the student loan refinance rates of several lenders to ensure you get the best interest rate for your situation. You can see student loan refinance offers tailored to your needs without impacting your credit score on Credible.
Will student loans be canceled?
It’s hard to predict whether Biden will be able to keep his promise to write off some federal student loan debt per borrower. He faces pressure from progressive lawmakers like Senator Elizabeth Warren (D-Mass.) And Senate Majority Leader Chuck Schumer to use his presidential authority to write off up to $ 50,000 in loan debts. students.
Schumer has previously said all the president has to do is “turn his pen” to forgive federal student loans. But in contrast, House Speaker Nancy Pelosi said the president did not have the power to write off student debt, adding that student loan cancellation “must be an act of Congress.”
Biden wondered if he could use an executive order to write off student loan debt. In April, he asked Education Secretary Miguel Cardona to provide a note on the president’s power to cancel student loans, Politico reported.
The Higher Education Act of 1965 gives the Secretary of Education the power to “enforce, pay, compromise, waive or release any right” over the collection of federal student loans. However, it is not clear whether this includes widespread debt cancellation measures like Biden proposed during the election campaign.
WILL BIDEN CANCEL STUDENT DEBT WITH AN EXECUTIVE ORDER?
How to reduce student loan debt if you don’t qualify for a forgiveness
For the millions of Americans who did not qualify for college debt cancellation, student loans can be a heavy financial burden. President Biden extended the federal student loan payment hiatus until January 2022, giving borrowers just a few months to plan for restarting payments amid new waves of the COVID-19 pandemic.
Fortunately, borrowers can take a few steps to lower their monthly student loan payments, lower the amount of interest they owe, and even try to qualify for other forms of student debt cancellation. Here are a few things you can do if you are looking for student loan repayment options.
STAFFORD LOANS ARE THE MOST POPULAR LOW INTEREST FEDERAL LOANS
Refinance at a lower interest rate
Refinancing a student loan is when you take out a new student loan with better terms to pay off your current debts. By refinancing at a lower interest rate, you may be able to lower your monthly payments, pay off debt faster, and even save money on interest over the life of the loan. Here are two popular repayment plans:
- Refinancing for a longer loan term can help you reduce your monthly payments. Creditworthy borrowers who refinanced a longer term student loan on Credible were able to reduce their monthly payments by more than $ 250 on average, all without increasing the cost of borrowing.
- Refinancing for a shorter loan term can help you pay off debt faster and save more money over time. Credible borrowers who refinanced a shorter-term loan were able to pay off their student loans 41 months faster and save nearly $ 17,000 in the process.
Plus, student loan refinance rates are nearing their all-time low, making it a good time to lock in a lower rate on your student loans.
Federal student loan borrowers should consider this: Although you may get a lower student loan rate, refinancing your federal loans into a private student loan will make you ineligible for federal protections such as income-based repayment plans and COVID-19 emergency abstention.
You can compare the student loan refinance rates from real lenders in the table below. When you are ready to begin the refinancing process, visit Credible to pre-qualify for student loan refinance offers without hurting your credit score.
Apply to other student loan cancellation programs
More than half a million borrowers have qualified for student loan cancellation under Biden through programs such as borrower advocacy, TPD dumps and closed school dumps. But if you don’t qualify for these student debt cancellation programs, you have a few other options:
- Public Service Loan Discount (PSLF). Eligible officials such as teachers, law enforcement, and public defenders may be eligible for payment of the remainder of their federal student debt after making 120 consecutive eligible payments under the PSLF program.
- Teacher loan rebate program. If you teach at a low-income school or educational services agency for 5 consecutive academic years, you may be eligible for a Federal Student Loan Discount of up to $ 17,500.
- Defense of the borrower on repayment. Students who have been misled by their school may be eligible for the Borrower Defense Program, which can pay off some or all of your student loan debt. The Biden administration forgave $ 1.5 billion in debt through the borrower advocacy program for students who attended the now defunct ITT technical institute as well as a few other schools.
It can be notoriously difficult to meet the requirements of federal loan discharges. For example, 98% of PSLF applications have been rejected since the start of the program.
BIDEN LAUNCHES INVESTIGATION TO REPAIR PUBLIC SERVICE LOAN REMEDY PROGRAM
Enroll in an income-based repayment plan or additional federal forbearance
Federal student loan repayments restart in February 2022, but a recent survey found that 40% of borrowers said longer administrative forbearance was needed.
If you’re not ready to resume federal student loan payments in a few months, you should sign up for an income-based repayment plan on the Federal Student Aid (FSA) website. This limits your student loan payments to around 10-20% of your disposable income.
You can also request up to 36 months of additional federal student loan forbearance by completing an Unemployment Deferment Application or an Economic Hardship Application.
WHAT ARE THE FEDERAL STUDENT LOAN LIMITS FOR UNDERGRADUATE AND GRADUATE STUDENTS?
Pay more than the minimum student loan payment
An easy way to reduce the amount you pay on your student loan debt – and pay off your student loans faster – is to make more than the minimum payment required. This will save you money on interest over time, helping you meet your other financial obligations and goals.
Find out how much money you can save by making more than the minimum student loan payment using Credible’s student loan calculator.
Confused About How To Manage Your Student Loan Debt? Get in touch with a knowledgeable loan officer at Credible who can answer all of your questions about student loans and student loan refinancing.
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