Federal student loan forbearance not extended in COVID-19 stimulus bill
WASHINGTON (Gray DC) – The $ 900 billion, 5,593 page stimulus bill does not address student loan debt. Millions of student loan borrowers could be required to resume federal student loan payments on February 1.
In March, Congress passed the CARES Act, which provided for federal forbearance on student loans, waived interest, and halted collection of delinquent loans until September 30.
In August, President Donald Trump signed a presidential memorandum extending student loan relief until December 31. Then, earlier this month, Education Secretary Betsy DeVos extended the deadline to January.
From now on, federal student loan borrowers will have to pay on February 1. But, according to Betsy Mayotte of the Institute of Student Loan Advisors, there is a chance that President-elect Joe Biden will step in after the inauguration.
“We think President Joe Biden is going to extend, it’s just a matter of when,” Mayotte said.
At the end of the forbearance period, Mayotte says it expects high delinquency rates.
“Borrowers have lost the habit of repaying,” Mayotte said. If you look at the research, a big indicator of the success of long-term student loan management is simply the habit of making a payment. Now all the borrowers are out.
According to the Federal Reserve, Americans face $ 1.7 trillion in student debt. There are several other measures designed to help borrowers floating around Washington.
Senator Tammy Baldwin (D-Wis.) Has taken on scammers in her recent bill. the Stop Student Debt Relief ScamsThis will improve administrative and law enforcement capacity to identify and end scams aimed at alleviating student debt. The legislation has been passed by both the House and the Senate and awaits the President’s signature.
“When you launch a new government program, it’s almost a signal for fraudsters and crooks to say, ‘Oh, we’re here to help you,’ but they’re only doing it for their own financial gain,” said Baldwin.
During the election campaign, President-elect Joe Biden backed a proposal to write off the federal debt of $ 10,000 per person. However, Mayotte says borrowers shouldn’t anticipate forgiveness.
“Borrowers should not make financial decisions based on the fact that there might be relief at some point,” Mayotte said.
She suggests that you take advantage of the forbearance period and discuss refinancing options if necessary.
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