Cancellation of student loan to exceed $ 90 billion during Covid-19 pandemic
Student loan borrowers will have received at least $ 90 billion in student loan forgiveness due to the Covid-19 pandemic.
Here is what you need to know.
President Joe Biden and Congress may be debating the future of student loan cancellation, including who, if any, will write off student loan debt and how much, if anything, will be canceled. student loans. In the midst of this ongoing debate, it is important to stress that over $ 90 billion in student loans will be canceled until September 30, 2021. How is it possible? Let’s explore.
Student loan cancellation: $ 90 billion in student loan forgiveness
Under the Cares Act – the $ 2.2 trillion stimulus package – Congress passed several temporary benefits for student loan borrowers, including:
- suspend federal student loan repayments;
- set interest rates at 0%; and
- stopping the collection of student loan receivables in the event of default.
These student loan benefits were scheduled to expire on September 30, 2020. However, President Donald Trump extended this student loan relief twice until January 31, 2021. When Biden became president, Biden extended this student loan relief until ‘until September 30, 2021. Student loan relief is scheduled to end on September 30, 2021, it is possible that Biden will extend the student loan relief beyond that date.
What does this have to do with student loan cancellation?
The US Department of Education released data confirming student borrowers collectively saved around $ 5 billion each month since student loan payments were suspended and interest was not accrued By September 30, 2021, student loan borrowers will save another 25 billion dollars. This represents a significant saving for student loan borrowers.
Does that mean student loan borrowers get $ 90 billion in student loan forgiveness?
It is important to clarify what this means. First, this student loan cancellation only applies to federal student loans owned by the US Department of Education. Second, there is no direct one-time student loan cancellation of existing student debt. Rather, this student loan cancellation is due to the fact that student borrowers do not have to pay interest during the Covid-19 pandemic. Therefore, consider this student loan discount for interest that won’t accumulate on your principal balance. It might not sound as exciting as canceling your student loan on time, but the amount can be significant. Why? In fact, from March 2020 to September 30, 2021, student borrowers will have no interest added to their federal student loans for 19 months. Consider this future student loan forgiveness (from the interest on the student loan that you won’t pay) rather than the current student loan forgiveness.
How much did borrowers save on average?
It is estimated, according to Yahoo finance, that student borrowers saved on average $ 2,000.
Biden also canceled $ 2.3 billion in student loans
The $ 90 billion student loan forgiveness isn’t the only student loan debt that was canceled during the Covid-19 pandemic. For example, Biden has already canceled $ 2.3 billion in student loans. (You can find out if you qualify for the $ 2.3 billion student loan forgiveness here). First, Biden canceled $ 1 billion in student loans for 72,000 student borrowers, and second, he canceled an additional $ 1.3 billion in student loans for 41,000 totally and permanently disabled borrowers. America reacted in different ways to the cancellation of Biden’s student loan. In addition to the direct cancellation of student loans and the cancellation of student loans due to lack of interest, student borrowers also benefited in another way during the Covid-19 pandemic. For example, student loan borrowers who want utility loan forgiveness have been given “credit” for making a monthly student loan payment, even though they did not. This is also a significant benefit, as student loan borrowers have potentially received 1.5 years of student payments counted toward the 10-year student loan payment requirement (120 monthly payments). This student loan cancellation is independent of any single student loan cancellation. If Congress or the President orders the cancellation of the student loan, this would be in addition to the forgiveness of the student loan which will continue until September 30, 2021.
When evaluating your student loan repayment options, be sure to consider these potential options: