The election is over, and Joe Biden won by a wide margin winning the most votes every cast for a presidential candidate.
President Biden was officially inaugurated and entered office on January 20, 2021, and immediately made an impact on the student loan world with a further extension to the pause on federal student loans.
Prior to Biden’s presidency, the CARES Act student loan benefits – which included a freeze on qualifying federal student loan payments and interest – were set to expire on January 31, 2021.
However, Biden put through a request on his first day as president to the U.S. Department of Education to further extend that deadline.
Now, the federal student loan pause on payments and interest will continue through September 30, 2021. That means if you have qualifying federal student debt, you won’t see any new bills or interest accrued until after October 1, 2021.
But Biden doesn’t plan on stopping there with the student loan crisis. Here are other possible actions the Biden administration may take to further address student loans in 2021.
What are Joe Biden’s current plans for student loan debt forgiveness?
President Biden may call on Congress to cancel $10,000 of student loan debt, tax-free (meaning it won’t be considered income for tax purposes like other repayment plans).
His potential proposal includes both federal and private loans. In dollars and cents, this proposal would cost $377 billion (from a total of $1.6 trillion in debt).
However, Biden is recommending that loan forgiveness start with those most in need — based on income or those “economically distressed” (a total of $166 billion). That means people will have to apply and demonstrate need before receiving relief.
Others in government have competing ideas. In fact, Senator Elizabeth Warren and Senate Minority Leader Chuck Schumer are calling on Biden to cancel $50,000 per student through executive order. And still others want targeted relief for those directly impacted by the COVID-19 pandemic and the unemployed.
Biden is also calling on Congress to reform existing federal student loan repayment programs, like public service loan forgiveness and income-driven repayment plans. He has even suggested that bankruptcy discharge be restored for student loan debt, something that has been exclude since 2005.
How can Democrats make their student loan proposals a reality?
There’s no doubt — student loan forgiveness is a wish list item for Democrats.
A lot rode on the dual senate runoff election that occurred in the state of Georgia. The two Democratic candidates won, which means the Senate is now tied 50-50 leaving the new Vice President, Kamala Harris, to cast the deciding ballot on any legislation with a tie vote.
With this new situation, the Biden administration should – in theory – have a much easier time pushing their student loan agendas forward.
If Biden pushes Congress to cancel $10,000 in federal student loans, for example, he shouldn’t have much difficulty getting that proposal passed.
What is the timeline for student loan debt to be addressed?
Now that Joe Biden has come into office, the Democratic party has big initiatives regarding student loan debt.
However, there is also a great deal of work to be done to stabilize the country, including a massive COVID-19 vaccination program currently underway and creating a government in the least hospitable environment in recent history. Add to that an economy that has suffered significant damage as the coronavirus continues to impact businesses, the unemployed, and many facing potential housing and food crises.
While the student loan crisis is certainly on the forefront of Joe Biden’s mind, he has said that he will work with Congress to find a bi-partisan solution and that may be difficult. Further, he has stated that he in not in favor of governing by executive order alone, so that may create further limitations.
More may be known following the first 100 days of the new administration.
What can I do about my student loan balance and interest now?
Addressing your student loan debt now may be the best idea rather than waiting for relief that may be months or years down the road. Consider refinancing your student loans, both federal and private, into a new, low-interest loan that will save you money.
The good news is interest rates may never be lower than they are right now. That means if you have good credit (above 670) and steady income, you may be eligible to refinance your student debt and achieve one or more of the following depending on your circumstances:
- Save money — with lower interest rates, and you will save money over the life of your loan.
- Reduce your monthly payment amount — with a reduced interest rate, your monthly payments will be lower and more affordable. You can even choose to extend the payment terms lowering that payment even more.
- Pay off your debt sooner — by choosing a shorter loan term, you can pay off your debt more quickly and then focus on other financial goals.
- Consolidate your loans into one simple monthly payment — if you have multiple student loans, each with a different due date, consolidating them all into one loan will simplify your monthly bills.
How do I know what loan terms are best?
Purefy understands how confusing the loan business can be — there are tons of companies all making big promises. How do you know who to trust?
Try Purefy’s Compare Rates tool. You can fill out some simple and straightforward personal information and our pool of top lenders will evaluate your information and submit their pre-approved offers.
You receive an easy-to-read comparison report that showcases each lender’s best offers. From there, you can select the best option and begin the lender’s application process. Or if you still have questions, you can schedule a free consultation with one of Purefy’s Student Loan Advisors who can explain your monthly savings and help you choose your best refinancing solution.
What are you waiting for — check out our best offers at Purefy.