Student Loan Debt Relief Important Updates

Student loan debt relief remains a major concern for many Americans. The ongoing coronavirus pandemic has affected Americans in a variety of ways, especially financially. Many people are still out of work or struggling to get by with reduced incomes, forced to decide where to tighten their belts just to keep the monthly bills paid. Those with student loan debt are especially worried about making timely monthly payments as they navigate the financial hardships of the COVID-19 era. More Americans than ever before are now in need of some level of student loan debt relief.

Federal Student Loan Payment Pause Extended

While the federal government first suspended payments for student loans owned by the Department of Education (including Direct Loans) in March, those payments were scheduled to resume on February 1st. Now, that date has been pushed back to September 30. However, not all loans qualify. The 9 million borrowers with Federal Family Education Loans (FFEL), Perkins Loans, and private loans are not covered under the new payment extension and will need to continue making payments.

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Income-Driven Repayment (IDR) Plans and Student Loan Debt Relief

Borrowers with Income-Driven Repayment (IDR) plans still need to re-certify annually. Even though payments are paused, the months still count toward loan forgiveness after 10, 20, or 25-year terms.
Annual recertification includes submitting proof of income, family size, marital status, and whether a spouse has federal loans. Borrowers in the Public Service Loan Forgiveness (PSLF) program must also submit annual employment certification.

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Is Partial Student Loan Forgiveness Coming Soon?

For some borrowers, it may be on the horizon. Currently, most proposals center around federal student loan forgiveness. House Democrats have pressed to include private loans, but this is unlikely since private loans involve agreements between lenders and students. Canceling private student debt may not be feasible for the federal government.

As with the pause on payments, any forgiveness package will likely exclude FFEL and Perkins Loans. However, Congress is pushing to include them in future proposals.

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How Much Student Loan Forgiveness Could Borrowers Receive?

The amount of potential forgiveness ranges from $5,000 to $50,000. In February, Senate Majority Leader Chuck Schumer, Sen. Elizabeth Warren, and other prominent Democrats introduced a resolution urging President Biden to cancel $50,000 in federal student loan debt per borrower.
This resolution also requests that forgiven loans be tax-free.

Currently, the president supports canceling $10,000 of federal student loan debt per borrower through Congress rather than executive action.

Hope for Student Loan Borrowers

Some level of student loan debt relief seems likely, but exact amounts and eligibility remain uncertain. For anyone struggling with loans during the financial crisis, this brings a ray of hope. As developments unfold, borrowers should stay informed about their options.

If you’re seeking professional help navigating the complex world of student loan debt relief, we can help. Contact us today.

Hope Credit provides expert student loan professionals ready to guide you through the fear and uncertainty.

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