There’s good news for student loan borrowers who are waiting for an answer on student loan cancellation and the student loan payment pause.
Here’s what you need to know — and what it means for your student loans.
The White House confirmed on Tuesday that President Joe Biden will decide whether to enact wide-scale student loan cancellation and extend the student loan payment pause. The student loan payment pause is scheduled to expire on August 31, 2022, but the White House didn’t confirm a specific date by which Biden will decide. Federal student loan payments have been paused since March 2022, when Congress passed the Cares Act, which included historic student loan relief. President Donald Trump and Biden have extended the student loan moratorium through executive action six times. “He’ll make a decision,” White House press secretary Karine Jean-Pierre said, referring to Biden. “I’ll let him speak.”
Biden confirms decision on student loan forgiveness
Biden has said he will decide on student loan forgiveness by August 31, when the student loan payment pause expires. Therefore, Biden has linked the timing of his decision on student loan cancellation and the student loan payment pause, even though they are separate policies. Biden has three major decisions on student loans — and three important deadlines. This includes finality on wide-scale student loan cancellation, the student loan payment pause and the limited waiver for student loan forgiveness. U.S. Secretary of Education Miguel Cardona said Biden could extend the student loan payment pause, as Biden has done four times previously. As reported Monday, Education Department instructed student loan servicers not to send student loan borrowers their student loan bill now. This suggests Biden could be close to announcing an extension of the student loan payment pause for federal student loans. Republicans in Congress have expressed concern that Biden has canceled $400 billion of student loans. They have warned policymakers that the Education Department is not ready for student loan forgiveness.
Student loan forgiveness: aggressive student loan cancellation, but mum on broad student loan relief
Biden has aggressively pursued targeted student loan cancellation, but he has been relatively mum on wide-scale student loan relief. For example, Biden has canceled more than $25 billion of student loans. This student loan relief includes $6 billion of student loans canceled recently through borrower defense to repayment. However, despite an ongoing push from Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) to cancel $50,000 of student loans, Biden has been reluctant to commit to any broad student loan forgiveness. Republicans have argued that wide-scale student loan relief benefits wealthier student loan borrowers and will increase inflation. While the White House says Biden hasn’t decided how to proceed, it’s clear that a decision is forthcoming. Don’t try to guess how Biden will decide. Your best strategy is to prepare for the restart of student loan payments and not expect significant student loan cancellation. While Biden could provide more relief, student loan cancellation may be limited in scope, and any extension of the student loan payment pause likely will be temporary. Here are some of the best ways to save money and pay off student loans faster:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)