As promised, on his first day in office President Joe Biden extended the moratorium on federal student loan payments to September 30, 2021. No payments are due, and interest rates have been reduced to 0% on federal loans only.
Those of you who are candidates for Public Service Loan Forgiveness will be credited as having made payments toward the 120 needed to qualify for forgiveness. (The payment suspension doesn’t apply to commercially held FFEL loans, Perkins loans, or any private loans. Anyone holding these types of loans should contact their servicer or lender directly to see if any relief options are available.)
As far as what’s coming down the pike, the following options have been discussed but would require Congressional approval:
- Members of the Biden Administration have been outspoken about forgiving up to $10,000 in student loan debt. The American Rescue Plan that was announced on January 14 didn’t include debt forgiveness, but that doesn’t mean the option is off the table. Loan forgiveness would probably apply to undergraduate loan balances only and would likely phase out for people earning $125,000 or more.
- Income-based repayment plans could be revised, with borrowers paying 5% of discretionary income rather than the current 10%-20%.
- Forgiveness of undergrad loans for borrowers who provide a public service would be capped at $50,000, with $10,000 forgiven after each year of qualifying employment.
- PSLF won’t be replaced, but it may be overhauled to include more loan types and repayment plans. Half of the borrower’s debt would be wiped out after five years, and any remaining balance could be forgiven after 120 payments have been made.
Assistance with navigating student debt repayment is available at no cost to CEA members from Cambridge Credit Counseling. Contact Todd Friedhaber (tfriedhaber@cambridge-credit.org or 800.527.7595, ext. 5373) or Martin Lynch (mlynch@cambridge-credit.org or 413.883.3390).
Learn more about your repayment options and how to manage your loans more effectively by registering for CEA’s free Degrees Not Debt webinar on Thursday, January 28, from 6-7:30pm https://cea.org/event/webinar-degrees-not-debt/2021-01-28. The webinar features a live question-and-answer session at the end.
