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Will there be another Extension?
The payment pause and interest waiver on federal student loans has been in effect for quite some time maybe even longer than we realised so is it going to be extended again for the sixth time inquiring minds. Want to know here’s what we found out hey guys it’s justine with a college investor investing in personal finance for millennials let’s talk about this payment pause and interest waiver because we have all been enjoying not being required to make any payments there’s no interest accruing on those federal student loans and so it gives you the flexibility to either pay those down while there’s no interest or refocus and shift that debt payment to something else in your personal finances. Now at the time of this recording that waiver is set to expire on may 1st 2022.
How long has the waiver been in effect?
It means that this pause this waiver has been in effect for 26 months just over two years and that accounts for roughly 125 billion dollars of waived interest.
Can the waiver be extended legally?
Can the payment pause be extended further well according to the heroes act of 2003 any kind of waiver or modification to this type of program can only be approved in connection with a national emergency and because the pandemic was declared a national emergency. We’re still able to see those extensions of the student loan payment and interest waiver again and again because we are still in this national emergency.
How many PSLF viewer are in Student Loan pause?
There’s also a limited public service loan forgiveness waiver that’s extended through october 31st of 2022 and because this modification was allowed because we have a national emergency. It may indicate that the biden administration will also push and extend this waiver one more time for everybody with federal student loans until october 31st of 2022. But this really is all up to president biden and whether or not he will continue this for a sixth time.
How borrowers currently feel in student loan pause?
in fact according to a cnbc student loan survey 29 of borrowers believe that repayment will resume on may 1st and 26 believe the president will extend the payment pause again, 28 believe some student loans will be forgiven and 14 believe that all student loans will be forgiven. I don’t see that happening but that’s just me also some other interesting statistics that came out of this survey is that 19 of republicans support forgiveness of all student loans compared with 43 percent of independents and 46 percent of democrats. There are also some divisions based off of demographics more women than men support student loan forgiveness plus black and hispanic survey respondents are more likely to support student loan forgiveness than white and and asian respondents younger responders are more likely to support student loan forgiveness 45 of genz and 43 of millennials versus 32 of gen x and 23 of baby boomers plus low income respondents and borrowers who owe more than others that don’t are more likely to be in favour of student loan forgiveness that makes sense right like if you’re the person who’s going through this and it’s really difficult for you to pay off those loans you would definitely be in support of some sort of forgiveness program.
How waivers are Driven?{reason of stuent loan pause}
All this to be said the most recent extension of the payment and interest pause really was driven by politics and not policy. A lot of people thought that student loans and employment would get back to pre-pandemic norms by the end of 2021 in a lot of ways it has kind of returned to pre-pandemic levels the unemployment rate for january 2022 was just at four percent which was the same as it was in january 2019. Before the pandemic also deferment forbearance delinquency and default are all at the pre-pandemic norm normal rates so with all this normalisation coming into place and seeing hey like borrowers actually can get back to making their student loan payments. It does kind of make you question whether or not we’re actually going to see a sixth extension though with the pandemic and the recent omicron variant that popped up there’s always going to be a little bit of that hesitation because we just don’t know what this pandemic is going to do and how long it’s going to last with these new variants popping up.
How Democrates and republicans feel?
it’s a house divided some democrats really want to see another extension some want just a blanket student loan cancellation for everybody and then there are others who are just not into it at all in fact representative virginia foxx of north carolina said that ”president biden’s latest extension is a troubling trend toward blanket student loan forgiveness’‘ which would be a massive mistake with major consequences for borrowers and taxpayers.
Broad students loans forgiveness
A broad student loan forgiveness can only be authorised by congress this cannot go through just a loan executive order from president biden. There really has to be approval from congress and who knows if we’ll ever see that happen so the path forward may be based off of some political decisions and that really kind of is unfortunate because i think the decision should be based off of how many people how many borrowers this actually impacts.
What borrowers can do in Student Loan Pause?
what can you do as a borrower right now well we know in fact that this extension is going to end may 1st 2022. There’s a couple of ideas that you can play around with if you have no emergency fund and you have high interest debt perhaps you focus on those as a goal first paying down that high interest debt while this debt is just dormant and on a freeze until may focus on setting aside extra money for an emergency fund. God forbid you lose your job you experience an accident your cell phone breaks you have the funds set aside that prevents you from going into debt. You’ll also want to focus on high interest debt such as credit cards because we know that interest is accruing very rapidly whereas the student loan debt is just dormant and you can focus on that when the time comes you can also sock away cash so that when the payments come back into play. you already have some cushion to kind of ease yourself back into making those monthly payments again next you’ll want to focus on your budget know exactly what income is coming in what expenses are going out including your debt payments you’ll want to make a written list of all of your debt and all of your fixed and fun expenses so you know exactly what to calculate and budget for accordingly.
Will the Student Loan Pause Extension actually happen?
i don’t think you can really bank on broad student loan forgiveness just yet and i don’t think you can bank on there being truly an extension until it happens. so always plan for worst case scenario and hope for the best maybe it will happen and then you’ll be that much further ahead because you’re planning for worst case scenario if you are needing more assistance and financial relief with your student loans, be sure to check out our free resources all about student loan debt and how you can advocate for yourself at thecollegeinvestor.com and we’ll catch you in the next one.
How Democrates and republicans feel?
it’s a house divided some democrats really want to see another extension some want just a blanket student loan cancellation for everybody and then there are others who are just not into it at all in fact representative virginia foxx of north carolina said that ”president biden’s latest extension is a troubling trend toward blanket student loan forgiveness” which would be a massive mistake with major consequences for borrowers and taxpayers.
How many PSLF viewer are in Student Loan pause?
There’s also a limited public service loan forgiveness waiver that’s extended through october 31st of 2022 and because this modification was allowed because we have a national emergency. It may indicate that the biden administration will also push and extend this waiver one more time for everybody with federal student loans until october 31st of 2022. But this really is all up to president biden and whether or not he will continue this for a sixth time.
