Student Loan Relief: No Further Extension From the Biden Administration

If you are wondering whether President Joe Biden will extend the ongoing student loan relief beyond January 2022, the short answer is, NO.

Here is all you need to know and what it means for your personal finances.

Calls To Extend The Interest Waiver On Student Loans

On December 06, a group of Democratic senators wrote a letter urging President Biden to extend the student loan relief from the Covid-19 pandemic should be extended “through the duration of the public health emergency. They expressed their concern that the emergence of the Omicron Covid-19 variant could potentially impact the US economy and student loan borrowers negatively. They said that current payment freeze provides much-needed relief to millions of Americans and:

“Continuing to waive student loan interest will provide borrowers with vital financial support during a time when students, borrowers …. are still recovering from economic and academic disruptions caused by the pandemic, including rising costs. … the waiver of student loan interest is saving borrowers an additional $5 billion each month. This is money that is now available for housing, food, and other daily necessities to help borrowers support themselves, their families, and their communities during this pandemic,” noted the senators in the letter.

They urged the Biden Administration should use its authority under Section 2(a)(1) of the Higher Education Relief Opportunities for Students (HEROES) Act of 2003 to extend the student loan interest waiver.

Despite these repeated requests by the members of the Congress for student loan relief to be extended, borrowers should not expect it to happen.

Here is why and what it means for your personal finances.

Relief on Student Loan Will Not Be Extended Again

The U.S. Department of education has made it clear that it is not extending the relief on student loans. In March 2020, the Congress passed the Cares Act (the $2.2 trillion stimulus package) to grant more than 40 million federal student loan borrowers substantial student loan relief in response to the negative impacts of the Covid-19 pandemic. This included a pause on mandatory student loan debt repayments, setting temporary relief on federal student loan interests (interest rates set at 0%), and many other benefits.

Initially, this student loan relief was supposed to last for six months, but President Trump extended it twice through executive orders. Biden extended the relief twice as well through the end of January 2022. While it is possible that Biden could have a change of heart, it is unlikely that it might happen at this point after his Administration definitively announced that there will be no further extensions. The Biden Administration has not given any public indication so far that they are even giving the extension a consideration.

Student loam borrowers to get $110 billion of student loan cancellation

As indicated in the letter by the senators, student loan borrowers have saved $5 billion every month during the Covid-19 pandemic because of the student loan interest relief. Since this relief has been in place for the past 22 months, that comes to a total of $110 billon in student loan interest cancellations for millions of student loan borrowers who have not seen student loan interest accruals on their federal student loans.

$110 billion is a significant saving by any measure. This cancellation is in addition to the $11.5 billion of student loans that have been cancelled since the beginning of the Biden administration brings to a total the cancellations student loan borrowers have received to over $121 billion. Apart from the last two extensions from student loan relief by the Biden administration, it has not put forward any substantial executive action towards large scale student loan cancellation.

As such, Biden has asked the congress to legislate the cancellation of up to $10,000 of student loans per borrower. The Biden administration has been carefully balancing student loan borrower needs and federal spending, and likely the same balancing is behind the lack of extension of the student loan relief.

What does this mean for you and your personal finances?

You have to start getting ready to resume making your student loan debt repayments in February as the freeze on student loan payment is set to end in January 2022.

While the potential impact of Omicron Covid-19 variant is not fully known from an economic standpoint, the Biden administration is focused on economic recovery and rebuilding the economy in the wake of the pandemic. While a further extension on student loan relief will certainly benefit student borrowers, your must get ready for any eventuality.

Here are some of the best ways to get prepared in case your finances get strained:

• Get Student loan refinancing which come at lower interest rates and at lower monthly payment)
• Get an income-driven repayment plans that will offer you lower payment, but at the same interest rate.
• Apply for personal loans such as payday loans and installment loans to help you finance different aspects of your finances if a good chunk of your income goes to repaying student loans.