Student Loan Freeze Ending This Month Highly Likely to Get Extended Again
After advising clients through the pandemic payment freeze going on for 2 ½ years now, it’s natural that my clients want to know what to expect next. Here’s the thing… Nobody knows exactly what’s going to happen, but all signs point to yet another extension after the deadline was set for the current extension to end on August 31st. That will make 7 payment extensions in total.
There was already plenty of speculation that this deadline would be extended. Many student loan borrowers have adjusted their lifestyles to put that earmarked payment to other things over the last 2+ years, especially with the rising cost of goods and housing. So take that combined with the economic uncertainty regarding a recession looming, and it’s not a great look for democrats going into a midterm election this fall to add an expense that Americans have almost wiped from their memory back into the forefront.
So experts tend to think the can will be kicked down the road yet again, likely into the new year. And that has been corroborated by the reported news that the Education Department told student loan servicers to hold off on sending billing notices to borrowers for September.
What about loan forgiveness?
The picture around the cloudiness of the debt forgiveness proposal is getting clearer. You might remember that on the campaign trail, Biden promised forgiveness of $10k of student loans per borrower. The progressive arm of the party has pushed for $50k, which Biden has publicly stated he will not do. He has also floated various requirements to qualify for student loan forgiveness since taking office including attendance at a public university or HBCU (Historically Black Colleges and Universities), undergrad loans only and to those earning under $125k annually. Since there’s no formal announcement yet, we’re left trying to read the tea leaves of political currents and cryptic statements made by the president and the education secretary.
My prediction is that we will all know much more very soon with a very well-timed announcement in advance of the midterm elections. I think this will be coupled with a new repayment plan that makes navigating the labyrinth of student loan repayment plans easier as well as a more streamlined forgiveness process for PSLF (Public Service Loan Forgiveness) which has been riddled with problems to date. We’ll be watching closely and helping our clients get the most out of whatever comes to pass along the way. Stay tuned for more from BKP as we get the deets!