Va. – People have been highly anticipating a decision from the Biden Administration over student loan repayment and forgiveness.
President Joe Biden could make the announcement on student loan forgiveness as soon as Wednesday.
Currently, there has been no extension of the pause on payments meaning people would need to start making payments come September 1.
Scott Kemp, a Student Loan Advocate, said people have gotten used to not having to make payments.
“That’s my biggest concern … is that they’ve been so out of practice for 2 ½ and almost 3 years of not making payments and so they’ve made adjustments in their budgets that do not include student loans,” Kemp said.
Initial reports hint that the administration could forgive up to $10,000 in student loans for people making less than $125,000.
Kemp said that threshold would still have a huge impact throughout the country.
“If it’s 10,000, 20,000, whatever it’s going to have a significant impact. I think my numbers are about 20% of loan borrowers will immediately have their loan balance forgiven. Then another I think 10% will have their loans cut in at least half,” Kemp said.
The pause on payments could once again be extended – This would be the fifth time under the Biden Administration.
Mary Jo Terry with YREFY, a company that specializes in refinancing student loans, said that this is actually the best time for people to start paying down their loans when the interest rate is low.
“If federal repayment gets extended and you can afford to pay $25 a month, $50 a month, $100 a month…whatever the number is. Remember that number comes directly off the principal balance of your loan. There’s no interest being charged,” Jo Terry said.
Both Jo Terry and Kemp said that most of the people they work with are unsure of the details when it comes to their student loans. Because of this, they suggest using the Federal Student Aid website as the first point to look up just the basics.
“It will give you all the information that you need on your student loans. It’ll tell you the balance of your loans, who your loan servicer is, and it even has a repayment calculator,” Jo Terry said.
While paying off student loans is often not fun for people, the benefits of student loans are also important.
“While student loans have been labeled as this bad-horrible burden that people have to carry, they also are a very effective tool and open the door for education to a lot of students which would not have that opportunity,” Kemp said.
As for people who have been paying off their student loans during the pause, there is no sure answer as to if they will get the money back. Part of the criticism also applies to people who did not take out any student loans and want some money back. These loans could include mortgage loans among other common loans.
If you are living in the Commonwealth of Virginia, you can use the Virginia Student Loan Help website to learn more information.