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President Joe Biden will extend the federal student loan payment moratorium for 60 days after June 30, 2023, or after the administration is allowed to follow through on its student loan forgiveness plan, the president announced in a video posted his official twitter page,
The White House said, “The extension will ease uncertainty for borrowers as the Biden-Harris administration asks the Supreme Court to review lower court orders that are blocking the department from providing debt relief for hundreds of millions of Americans.” ” wrote in a statement,
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The news comes as Biden’s student loan forgiveness plan faces multiple lawsuits.
“The courts’ drastic efforts to block student loan relief have created tremendous financial uncertainty for millions of borrowers who cannot set their family budgets or even plan their vacations without a clear picture of their student loan obligations.” can’t even plan for, and that’s absolutely wrong,” Secretary of Education Miguel Cardona said in the statement.
The latest expansion on the student loan payment freeze is a part of a provision in the CARES Act enacted in 2020. It froze payments on eligible student loans held by the Department of Education and reduced interest rates to 0%. Prior to today’s announcement, the freeze was set to expire on December 31, 2022. The Trump-era pay freeze has been extended multiple times.
More recently, activist groups asked Biden to consider freezing payments as courts validate the legality of his proposal, which could wipe out millions of people in student loan debt.
Biden’s student loan relief plan calls for forgiveness of up to $10,000 in federal student loans or up to $20,000 for Pell grant recipients. To be eligible, borrowers cannot earn more than $125,000 per year for filing singles or $250,000 for married couples.
If you have private student loans, these will not qualify for any federal loan forgiveness. But you might consider refinancing your loan to a lower rate to help you save on your monthly payments. Visit Credible to speak with a student loan refinance professional to see if this option is right for you.
Biden’s student loan forgiveness: Timing of the legal challenges facing the plan
When does student loan repayment start?
The White House said in its statement that student loan payments would resume 60 days after the Department of Education is allowed to implement its student loan forgiveness plan or after the litigation is resolved.
“If the program is not implemented and the litigation is not resolved by June 30, 2023 – payments will resume 60 days after that,” the White House said.
The Department of Education was recently forced to stop accepting new applications for student loan relief.
“The courts have issued orders blocking our student loan relief program,” in a statement StudentEd.gov reads. “As a result, at this time, we are not accepting applications. We are seeking to reverse those orders. If you have already applied, we will put your application on hold.”
But neither the student loan payment freeze or the possible widespread forgiveness would apply to private student loans. If you have private student loans, you can refinance these loans to lower your interest rate and monthly payments. Visit Credible to compare different student loan lenders without affecting your credit score.
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Student loan forgiveness still blocked
The Biden administration extended the federal student loan payment moratorium until the middle of next year as its student loan forgiveness plan remains blocked.
Earlier this month, the 8th US Circuit Court of Appeals in St. Louis issued an injunction preventing the Department of Education from eliminating student loan debt based on Biden’s executive order in August.
The block stems from a lawsuit brought by Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina. The plaintiffs argue that the plan would put their future tax revenue at risk. A federal judge rejected their arguments, but the states appealed the decision.
In a separate case, a federal judge in Texas ruled Biden’s loan forgiveness plan “unlawful” and blocked the student loan forgiveness plan as well. That lawsuit was led by two borrowers who were partially or completely ineligible for loan forgiveness.
If you have private student loans, you may want to consider refinancing your private student loans to lower your interest rate and monthly payments. Visit Credible to compare different student loan lenders without affecting your credit score.
Student loan defaults could rise to historic high without debt relief: Education Department
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Biden administration extends student loan payment pause into 2023
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