Student Loan Payment Pause Is Approaching Due Date

At the end of the month, the Biden administration is due to decide whether to extend or end the payment pause on all federal student loans.

We’re All in This Together

More than 40 million Americans carry a combined debt burden of over $1.6 trillion. Student loans have become a hot-button issue with rising inflation and a deteriorating economy. Americans are worried that paying back student loans could be even more of a challenge in the coming years.

Where It All Began

The current policy was implemented in response to the financial turbulence brought about by Covid-19. Starting on March 27th, 2020, loan interest rates have been frozen at 0%, and all payments have been paused. Some people expect Biden to withhold on restarting loan payments, but financial advisors say it’s good to prepare.

“Extension of the repayment pause is highly likely. But it’s always a good idea for borrowers to plan for future payments anyhow,” says Cecil Staton, the President, and Wealth Advisor at Arch Financial Planning.

Related: Joe Biden: “Our Economy Had 0% Inflation in July,” Twitter Reacts

Forgive and Forget

The government may yet decide to simply waive some of the outstanding student loan debt for millions of Americans. Biden is allegedly thinking about forgiving $10,000 of debt per borrower.

Officials at the Education Department have finalized a mass debt cancellation plan, which is ready to implement with the President’s go-ahead. Under this plan, all types of federal student loans would be eligible for relief. Types of debt include GRAD, Parent PLUS, and any debt owned by private firms.

Watch Out

Borrowers who took out student loans through private firms need to keep a close eye on rising interest rates. Loans from private companies usually come with a variable interest rate, so the amount you pay may increase as the Fed increases interest rates. You can always shop around for other rates, though. Debt consolidation may also help lighten the load.

More Articles by the Wealth of Geeks Network

This article was produced and syndicated by Wealth of Geeks.

Featured Image Credit: Shutterstock.