An explosive new announcement from the White House: President Joe Biden cancel student loans or extend the suspension of student loans a fifth time before August 31, 2022.
Here’s what you need to know — and what it means for your student loans.
Days after extending the student loan payment pause for the fourth time, White House press secretary Jen Psaki said Biden is potentially preparing to extend the student loan payment pause again or enact a large-scale student loan cancellation. On a new episode of the podcast Pod Save AmericaPSAKI said: “So by August 31, [the student loan pause is] either it’s going to be extended or we’re going to make a decision, like [White House Chief of Staff] Ron [Klain] referenced, on the cancellation of student debt.
Breaking News: Student loan suspension or student loan cancellation?
PSAKI’s announcement is do not a repeat of Klain’s comments from a previous Pod Save America podcast episode. On the contrary, Klain’s comments were different from what PSAki described. Last month, Klain said, “The president is going to look at what we should do on student debt before the break expires, or he’ll extend the break.” First, Klain said this before Biden extended the student loan payment break until August 31. Klain talked about deciding before the student loan payment break expires on May 1. Second, Klain never made reference to an extension of the student loan payment break beyond August 31. Third, Klain never explicitly referred to large-scale student loan cancellation. (Here’s who won’t qualify for $6.2 billion in student loan forgiveness). Instead, Klain said, “the president is going to look at what we should do.” This is a broad statement on student loans, which could include targeted student loan forgiveness, fixing civil service loan forgiveness, or improving student loan repayment. (Student loan cancellation and student loan payment suspension are confusing. Here’s what to know).
What this means for your student loans
This is a potential game changer for student loans. Now, PSAki says that at a minimum, the student loan payment break could be extended beyond August 31. (Biden could extend the student loan payment break indefinitely.) At most, Biden could forgive student loans. This is an important development and different from what the Biden administration has said previously. Yes, there has been speculation that Biden will extend the student loan payment pause at least beyond the November 8, 2022 midterm elections. Why? Progressive Democrats in Congress have pressured Biden to extend student loan relief and cancel student loans. They fear that without more student loan relief, Democrats will lose control of Congress in the next election. (If student loans aren’t canceled, borrowers are threatening to vote out the Democrats). However, the Biden administration had never explicitly confirmed this game plan before. PSAki had previously confirmed that Biden was still considering a large-scale student loan forgiveness.
Student loans: next steps
Will your student loans be forgiven? Interestingly, if you analyze his words, PSAki said Biden would extend the student loan payment break or cancel student loans. This statement implies that Is the option is possible, but do not both. If this is true, it may raise more questions. For example, what type of student loan forgiveness? Is this a targeted cancellation of student loans? Large scale student loan cancellation? How much student loan forgiveness? Will everyone be eligible for student loan forgiveness, or will it be focused only on low-income student borrowers? (Biden removed the student loan cancellation from the budget). PSAki also said on the podcast that Biden still prefers Congress to enact $10,000 in large-scale student loan forgiveness. (Cancelling a student loan might be different from what you expected). Why? If Biden attempts to enact large-scale student loan forgiveness, it could lead to legal challenges in court, which could delay implementation. Alternatively, a future Republican president could issue an executive order to end all student loan forgiveness. (Student Loan Relief: How to Qualify for a “Fresh Start” on Your Student Loans).
Despite this latest development, there is no guarantee that Biden will suspend student loans for the fifth time or enact large-scale student loan forgiveness. For now, student loan repayments resume as of September 1, 2022. Are you ready? Here are some of the best ways to take control of your financial life and pay off your student loans: