President Biden confirmed he will decide wide-scale student loan cancellation by August.
Here’s what you need to know — and what it means for your student loans.
After Biden arrived on Air Force One at Joint Base Andrews on Wednesday, Biden affirmed his commitment to announce a decision on wide-scale student loan cancellation. Here’s the president’s exchange with a reporter:
Reporter: “What about the student loan decision, sir? People have said that you’re going to make that decision by the end of August. Where does that stand at this point?”
Biden: “By the end of August.”
What this means for your student loans
Biden’s four-word answer extinguishes speculation about when the president would announce his decision on student loan forgiveness. That said, neither the reporter’s question nor Biden’s answer specifically referenced “student loan forgiveness.” In the coming weeks, Biden has three major decisions on student loans — and three important deadlines. The reporter’s question refers to “the student loan decision.” That phrase most likely refers to the possibility of Biden canceling student loans for millions of student loan borrowers. However, “the student loan decision” could also refer to the end of the loan payment pause. Student loan payments for federal student loans have been paused continuously since March 2020. The student loan payment pause will end on August 31, 2022. There has been speculation about whether student loan payments will restart on September 1, with the U.S. Secretary of Education Miguel Cardona stating that Biden could extend the student loan payment pause. Previously, Biden noted he would announce a decision before the scheduled end of the student loan payment pause. Republicans in Congress have expressed concern that Biden has canceled $400 billion of student loans. They have also warned that the Education Department is not ready for student loan forgiveness.
Student loan forgiveness: next steps
Based on Biden’s statement, student loan borrowers should expect an announcement within weeks. Biden has several options regarding student loan cancellation and the restart of student loan payments. He could choose any combination of canceling or not canceling student loans or pausing or restarting student loan payments. While student loan borrowers have been waiting anxiously for Biden’s decision, Biden may decide not to cancel student loans due to economic uncertainty or high inflation, for example. If Biden doesn’t cancel student loans, student loan borrowers will still benefit from major changes to student loan forgiveness. For example, Biden has simplified the rules for student loan forgiveness, proposed big changes to student loan servicers, and proposed to lower interest on student loans. Biden hasn’t indicated that he will extend the student loan payment pause. Therefore, student loan borrowers should expect student loan payments for federal loans to restart on September 1. Here are some popular ways to pay off student loans faster and save money:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)