DIKSIA.COM - Student loan debt is a major issue for many Americans, especially in the wake of the Covid-19 pandemic that has disrupted the economy and the education system. According to the latest data from the Department of Education, there are more than 45 million federal student loan borrowers who collectively owe $1.6 trillion. Many of these borrowers struggle to make their monthly payments, face high interest rates, and have limited options for forgiveness or cancellation.
President Joe Biden has made student loan relief one of his priorities since he took office in January 2021. He has extended the payment pause and interest waiver on federal student loans until June 2023, launched a new income-driven repayment plan called SAVE, and approved nearly $132 billion in debt cancellation for more than 3.6 million borrowers who qualify for various programs.
In this article, we will explain the main features of Biden's student loan plan, who can benefit from it, and how to apply for it. We will also discuss some of the challenges and criticisms that the plan faces, and what the future may hold for student loan borrowers under the Biden administration.
Payment Pause and Interest Waiver
One of the first actions that Biden took as president was to extend the payment pause and interest waiver on federal student loans that was initiated by former President Donald Trump in March 2020 due to the Covid-19 crisis. This means that most federal student loan borrowers do not have to make any payments or accrue any interest on their loans until June 30, 2023. This relief applies to Direct Loans, FFEL Program loans owned by the Department of Education, and Perkins Loans owned by the Department of Education. It does not apply to private student loans or FFEL Program loans or Perkins Loans owned by other entities.
The payment pause and interest waiver is intended to provide financial relief and flexibility to borrowers who may have lost their income, faced increased expenses, or experienced other hardships due to the pandemic. It also allows borrowers to save money on interest and use their funds for other purposes, such as paying off other debts, building an emergency fund, or investing for the future. Additionally, the payment pause and interest waiver counts toward the required number of payments for forgiveness programs, such as Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) forgiveness.