Student loan payment break: what to expect

Here’s what to expect with the student loan payment break.

Here’s what you need to know — and what it means for your student loans.

Student loans

This week could be the most important period in the history of student loans. President Joe Biden is considering two major proposals that could impact more than 40 million student borrowers. First, Biden is considering whether to extend the student loan payment pause, which could delay the restart of federal student loan payments. Second, the president plans to enact a large-scale student loan forgiveness. There are several reasons why Biden could extend the student loan payment pause and enact large-scale student loan forgiveness. Here are some predictions for the student loan payment break.


1. Pausing student loan payments: Expect Biden to announce decision this week

The student loan payment pause ends on August 31, 2022. In the absence of an extension, student loan payments for federal student loans will resume on September 1. US Department of Education Secretary Miguel Cardona confirmed yesterday that Biden will announce his decision on the student loan payment pause. this week.


2. Biden could extend student loan payment break again

Expect Biden to extend the student loan payment break again. The Biden administration has been relatively silent on whether the president will extend the student loan payment pause. If Biden extends the student loan payment break, expect these 5 things. Federal student loan repayments have been temporarily suspended since March 2020, when Congress approved historic student loan relief. President Donald Trump and Biden have collectively extended the student loan payment break six times. Typically, student borrowers have received at least several weeks notice prior to previous extensions. With student loan repayments set to resume next week, Biden is unlikely to let the student loan payment pause expire on just a few days’ notice. The Department of Education has also advised student loan servicers — the companies that collect student loan payments — not to issue federal student loan bills to student borrowers. If borrowers don’t receive their student loan bills, it’s another sign that Biden could approve a seventh extension to the student loan payment break.


3. The student loan payment pause could last several months

If the president extends the student loan payment break, expect the extension to last several months. Republicans have criticized a possible extension of the student loan moratorium, calling it fiscally irresponsible and a ploy by Democrats to win votes in November’s midterm elections. Democrats say student borrowers are grappling with the ongoing Covid-19 pandemic and aren’t ready to restart student loan repayments. Like Sen. Elizabeth Warren (D-MA), Biden is also concerned about student borrowers facing default, which is why he’s giving them a “fresh start.” If Biden extends the student loan payment pause, it will likely extend beyond the November 8, 2022 election. A logical deadline could be December 31, 2022. Given that day is a holiday, Biden could also choose on January 31, 2023.


4. If Biden extends the student loan payment break, expect it to be the last break

Never say never, but if Biden extends the student loan payment break, expect it to happen until the final extension. Biden may not label the potential extension as “final,” but you should plan as if student loan repayments start up again afterward. Biden could weigh several factors when deciding whether or not to extend the student loan payment break. For example, among other factors, Biden will likely consider the economy, inflation, the Covid-19 pandemic, the cost of suspending student loans.


Student loans: next steps

The next step for your student loans is to follow Biden’s announcement on the student loan payment pause, which could come any day. The US Department of Education should also contact you in writing regarding the status of federal student loan repayments. If you have any questions, you should contact your student loan officer. It is important to note that there is no guarantee that the student loan payment pause will continue or for how long. Also, the student loan payment pause is temporary. Therefore, you need a long-term strategy for repaying student loans. Here are some of the best ways to save money and pay off student loans faster:


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