What Biden’s decree on student loan deferrals means to you
During his first week in office, President Joe Biden issued executive order extending student loan deferrals until September 30. The CARES law passed last April halted the accumulation of interest and payment obligations on most federal student loans until January 31. The Biden order gives borrowers an additional eight months.
If you have any qualifying loans, that’s good news. Borrowers who are currently unemployed will have a break, and those who are working can take advantage of it as a chance to gain financial ground. They can use the extra money in their budget to pay off other debts, build up emergency funds, or accomplish other goals. They can even repay their student loans to reduce their obligation at the end of the deferral.
These loan deferrals have economic stimulus value because student loans have been a drag on the middle class for the past decade. US News and World Report found that the average borrowing of those using student loans exceeded $ 30,000 for the class of 2019, a 26% increase over the class of 2009 over a period when the rate d cumulative inflation was 19.2%. This obligation prevents people from buying cars, furniture and other basic adult middle class goods.
In fact, the popularity and effectiveness of the deferral program could lead to student loan reforms such as income-based repayment or partial forgiveness. However, borrowers should not rely on it to determine what to do during this period of deferment.
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This article originally appeared on GOBankingRates.com: What Biden’s decree on student loan deferrals means to you