How Likely Is It That Student Loans Will Be Made? And should you pause or pay off your loans?

The country’s more than 45 million borrowers have now had their federal loan payments deferred for nearly a year. And one of President Joseph Biden’s first acts was to extend this pause in federal student loan payments until September.

Biden’s executive measure, signed on his first day in office last week, means federal student loan payments and recoveries will be put on hold until September and the interest rate will be held at 0%. “Too many Americans struggle to meet their basic needs and feed their families,” he said. “You shouldn’t be forced to choose between paying your student loan or setting up food.”

However, if you are not in this situation, does it make sense to take advantage of the 0% temporary interest rate to try to pay off your student loan even faster? Or is it worth waiting to see if some of these loans will be waived? President Biden has proposed cutting $ 10,000 in government student debt per borrower. But how likely is it that student loan debt relief will actually take place in the coming months? And is it possible that federal student debt relief could cover an even larger amount, as some have advocated? We will investigate these questions below.

How Likely is Short Term Debt Relief for Students?

The president’s draft of the proposed $ 1.9 trillion stimulus package he unveiled this month makes no mention of canceling student debt. But the president has said he’s still backing $ 10,000 in forgiveness per federal student loan borrower. And the drive for some student loan waiver has picked up, at least among the Democrats who hold the majority in Congress. The likelihood that some form of debt relief will be introduced is therefore relatively high. But when that can happen, who qualifies and how much is awarded, is less clear.

College expert Mark Kantrowitz, editor and VP of Research at, says the $ 10,000 loan “is more likely than not,” but warns it is not yet complete. “And even if it does, it can be reduced in a number of ways, such as those who owe less than $ 10,000.”

Forgiveness may also be limited to borrowers on federal education department loans, as well as the payment hiatus and interest waiver that some federal student loan borrowers would exclude. (For example, the current payment hiatus and 0% interest rate covers federal direct loans, FFEL program loans, federal Perkins loans, and defaulted HEAL loans, but only if they are U.S. Department of Education loans.)

But the pressure to take student loans off is growing. Student loan borrowers now total nearly $ 1.7 trillion, and student debt was a hot topic during the campaign. In a recent Morning Consult poll, 56% of adults said they were strong or somewhat supportive of the $ 10,000 student loan scheme that Biden advocated during his campaign. Biden has also urged Congress to pass a bill that will cancel federal student loan debt of $ 10,000. However, it is unclear whether there would be enough GOP support to pass bipartisan laws.

How could Democrats enforce student loan forgiveness?

In a recent column, Senator Bernie Sanders (I-VT), the future chairman of the Senate Budget Committee, urged Congress to use the budget balancing process if Republicans are unwilling to pass such a bipartisan bill.

Normally the Senate has a threshold of 60 votes to pass important bills, but what is known as the budget reconciliation process allows lawmakers to pass comprehensive bills with just 51 votes. The budget adjustment was created under the Congressional Budget Act of 1974 and allows the adjustment to be used for laws that change expenses, income, and the federal debt limit.

The process has been used in the past to expedite high priority tax legislation. During the Donald Trump and George W. Bush administrations, Sanders said, Republicans used the budget reconciliation process to enforce “trillions of dollars in tax breaks.” According to the Center on Budget and Policy Priorities, policy makers have passed 21 draft budget voting laws since 1980.

“I think if the Democrats will try to do this through reconciliation, when relief cannot be achieved through bipartisan means, their chances of success will improve dramatically,” said Tim Stobierski, founder and editor of the Student resource page. for students debt warriors.

It appears that Democratic Congress leaders are setting the stage in the coming days for the budget reconciliation process to begin, but it is not clear whether student loan issuance will be included in the law.

What about the $ 50,000 student loan proposal?

Senate Majority Leader Chuck Schumer (D-NY), last month required To cancel up to $ 50,000 in debt for federal student loan borrowers earning less than $ 125,000 a year – and urged President Biden to use executive powers to do so. A move also sponsored by Senator Elizabeth Warren (D-MA). Schumer hit the headlines again this week when he repeated himself his call for #cancelstudentdebt on Twitter with a tweet that garnered almost 130,000 likes in less than a day.

Proponents like Schumer and Warren say the Higher Education Act of 1965 gives the U.S. Secretary of Education the power to cancel student loans without further approval from Congress. However, Biden has repeatedly indicated that he would prefer Congress to pass a bill canceling student loans.

Kantrowitz estimates that $ 10,000 per borrower waiver would cost about $ 377 billion for all federal student loan borrowers, while $ 50,000 debt relief for all borrowers would cost $ 1,049 trillion.

While lawmakers discuss options, the September hiatus will provide temporary relief to federal student loan borrowers.

What the extended payment hiatus means for student loans

President Biden’s executive move to extend the student loan payment hiatus means that federal student loan borrowers whose debt is owned by the U.S. Department of Education can withhold payments until September and not have to pay any penalties or accrued interest. (If your school or other lender has federal loan debt, you can contact them directly. They can offer the same benefits. You can also group any FFEL programs or Federal Perkins loans that are not owned by ED into a direct consolidation loan that would be entitled to 0% interest.)

It also means that any payments made will be used directly to pay back the principal owed. However, Kantrowitz cautions that before deciding whether to expedite the repayment of loans eligible for the payment hiatus and interest waiver, borrowers should be sure that they have built up their emergency funds in the event they lose their jobs .

It also does not recommend making any payments on your federal student loan during this period if you expect a loan under the government loan program or at the end of the 20- or 25-year repayment period in an income-based repayment plan Loan is waived. Additional payments would only reduce the amount of forgiveness you will eventually receive.

But if you have enough savings to cover the expenses for a few months, then you have more than $ 10,000 in federal student loan debt, and you don’t have any debt with a higher interest rate to focus on instead to use the 0% interest period to make payments on your principal. This means that the amount you borrow will decrease faster and you will pay less overall over time.

And September is still seven months away, which gives lawmakers plenty of time to discuss – and possibly pass – some student loan enactment laws.

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