Student Loan Repayment To Resume In October, Confirms Education Department
After a three-year-long pause on federal student loan payments, the Biden Administration has decided to resume the repayments. The Education Department posted on its website that "payments will be due starting in October".
It's going to take some time for borrowers to settle in after the significantly long break. As per CNBC, around 43 million Americans are set to return to repayment mode with the average bill being $350.
Pause Extended 8 Times
Yes, the pause has been extended eight times since 2020. The pause was only meant to provide temporary relief but ended up getting extended sevral times. Borrowers who are worried about the payments can plan beforehand to ease into it.
What Kind Of Student Loans Could Be Forgiven?
To qualify, the borrower must have an annual income of less than $125,000. Borrowers who meet this criteria can save up to $10,000 in student loans, as per Bold.org.
When Will The Pause On Repayment End?
As per The Guardian, Republicans didn't let Biden Administration extend the pause any further, and the plan is now tied up in the US courts. As per studentaid.gov, "Courts have issued orders blocking our student debt relief program, Congress recently passed a law preventing further extensions of the payment pause. Student loan interest will resume starting Sept. 1 and payments will be due starting in October."
How To Prepare For The Federal Loan Repayment?
Here are certain steps you can take
Connect With Your Servicer- As we know that some of the companies that used to give out loans will no longer be doing so. As a result, many of the borrowers will have to adjust to a new servicer. Head to studentaid.gov to know more...Make sure your services have your updated contact information so that you are intimated timely.
Look for the repayment option that suits you best- Income-driven repayment has become way more appealing after President Joe Biden signed the $1.9 trillion federal Coronavirus stimulus package. So you would want to check out the new schemes that may be better for your current circumstance.
If You Can't Afford The Payments- You can always put in requests for economic hardships or unemployment deferment. If you don't meet the criteria for the mentioned options, you can always look into forbearance to continue suspending your bills.
$1.6 Trillion Dollars in Student Loans
As per CNBC Make It, college graduates tend to earn 80% more compared to those with just a high school diploma. This explains why everyone is trying to get a degree. College was always expensive but has become more important than it has ever been.
David Deming, a professor of public policy at the Harvard Kennedy School and also the Harvard Graduate School of Education told CNBC that "when it comes to the student loan crisis" everyone shares a little bit of blame.
He also talks about how this is the first in the country's history that it has held $1.6 trillion dollars in student loans.
"A generation ago, there was a system that helped you not take on the risk yourself to pay for college education, but society took on the risk for you by making tuition cheap and allowing you to benefit from that experience and then pay it back in the form of higher tax revenue. We’ve shifted the risk from society directly to the student."
"And that’s not a narrative that just has to do with bad actors and good actors. In many ways is a societal choice we’ve made. And in that sense, we all have to answer for it," he said.