Across the United States, over 45 million borrowers owe a staggering $1.6 trillion for federal loans taken out for college. However, they will have a few extra months of relief with Biden’s extension of the payment moratorium. Initially, the pause on payments was set to expire on May 1 but has now been extended until Aug. 31.
This marks the sixth time Biden has extended this pause for borrowers in the two years since the pandemic’s start.
What Education Secretary Miguel Cardona Has To Say
Education Secretary Miguel Cardona was interviewed on April 12 by CBS News. “We’re pleased that we are able to make this announcement, and we know that Americans are hurting.”
Cardona then explained the fresh start would help borrowers and what this could mean for the future.
The Biden administration keeps talking about possibly removing the student debt, either by canceling it entirely, or at least canceling $10,000 of it. However, nothing has been formally announced, despite Congressional Democrats pleas for Biden to cancel student loans entirely for several months.
Meanwhile, some economists are claiming that restarting the payments for students will make it financially challenging for millions of adults.
Students Share Their Stories
Samantha Brandon is a pharmacist with a high student loan burden.
“The student loan pauses are extremely helpful,” Brandon said. “It’s helping us save for emergency funds, pay off debts, and save up for a vehicle that we desperately need.”
With the high costs of goods, housing, and inflation, millennials who want to start their families are in a horrible position that generations never had to deal with.
“I’m hoping these student loan pauses are a bridge to a better, long-term solution to the student loan crisis,” Brandon said.
According to her website, Brandon lived the American dream until the pandemic hit in 2020. With a bachelor’s degree in Biochemistry and a minor in business administration, she was accepted into graduate school for a Doctor of Pharmacy.
After graduation, Brandon headed into a highly sought out residency. After that, she landed her dream pharmacist job. She then married her high school sweetheart, bought a house, and had two children.
Sounds perfect, right?
Brandon described that time as being unhappy. She was drowning in over $400,000 of student debt. Then, when the pandemic struck, the nightmare began. Brandon found herself pregnant and in isolation.
In 2021, her father was nearly killed by a drunk driver, and six months later, she suffered from a spinal CSF leak that left her bedridden. With this, she went from working a 60-hour full-time job to being stuck at home.
Being home with her kids gave her the inspiration for starting a blog dedicated to working moms and help them find the tools they need to help improve their lives.
For people like this, the pause helps with their everyday lives.
For other people, like Jenn Lloyd, it took her 22 years to pay off her student loans. Should people have to endure that long of a financial burden to pay off their loans? Should student loans compare to a home mortgage, taking the same 30 years to pay both off?
What Does This Mean for Borrowers in Default?
The suspension benefited over 40 million borrowers throughout the country. Before the pandemic, some people had not made a payment in over a year, putting them in default. Normally, that would mean a borrower was at risk of the federal government withholding a portion of their income.
But Congress wants to give those borrowers a pathway to bring their loans back into good standing.
The extended pause gives them a chance to restructure their finances while they plan to resume payments at the beginning of September.
However, a recent study found that the percentage of people who would benefit from the loan cancellation depends on several factors and how much is forgiven.
“In terms of the loan forgiveness, there is no simple solution here, but we do know that our borrowers do need relief,” Education Secretary Miguel Cardona told CBS News.
The White House announced they will decide whether or not to cancel the debt between now and August.
Cardona added, “we’re trying to provide support for all borrowers while also looking for ways to provide relief for those programs like Public Service Loan Forgiveness, income-driven repayment, and we’re continuing conversations about a more broad-based loan relief program.”
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This post was produced and syndicated by Wealth of Geeks.
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