A new bombshell announcement from the White House: President Joe Biden cancel student loans for the fifth time or extend the student loan break by August 31, 2022.
Here’s what you need to know – and what it means for your student loans.
Days after the fourth extension of the student loan pause, White House Press Secretary Jen Psaki said Biden is preparing to potentially extend the student loan pause again or enact a large-scale cancellation of student loans. In a new episode of the podcast Pod Save AmericaPsaki said: “So until the 31. [the student loan pause is] either it will be extended or we will make a decision how [White House Chief of Staff] Ron [Klain] referenced, about canceling student debt.”
Breaking News: Bafög break or Bafög cancellation?
Psaki’s announcement is not a repeat of Klain’s comments from a previous Pod Save America podcast episode. Rather, Klain’s comments differed from what Psaki described. Last month, Klain said, “The president will review what we should do with student debt before recess ends, or he’ll extend recess.” That’s what Klain said first In front Biden extended the student loan payment pause to Aug. 31. Klain cited a decision before the May 1 student loan payment pause expired. Second, Klain never referred to an extension of the student loan payment pause beyond August 31. Third, Klain never specifically referred to Wide-scaled student loan cancellation. (Here’s who doesn’t qualify for $6.2 billion student loan cancellations). Rather, Klain said, “The President is going to look at what we should do.” This is a general statement about student loans, including targeting student loan cancellations, determining government loan forgiveness, or improving student loan repayments can. (Student loan cancellation and student loan payment pause are confusing. Here’s what you should know.)
What this means for your student loans
This is a potential game changer for student loans. Now Psaki says the student loan payment pause could be extended at least past August 31. (Biden could extend student loan payment pause forever). At most, Biden could call in student loans. This is a significant development and different from what the Biden administration has previously said. Yes, there has been speculation that Biden would extend the student loan payment pause at least past the Nov. 8, 2022 midterm election. Why? Progressive Democrats in Congress have been pressuring Biden to extend student loan easements and cancel student loans. They fear that without further easing on student loans, Democrats will lose control of Congress in the upcoming election. (If student loans are not called, borrowers threaten to vote against the Democrats). However, the Biden administration has never explicitly confirmed this game plan before. Psaki previously confirmed that Biden is still considering large-scale student loan forgiveness.
Student loans: next steps
Is Your Student Loan Called Out? Interestingly, if you analyze her words, Psaki said that Biden will either extend the student loan payment pause or cancel student loans. This statement implies that either option is possible but not both. If so, this may raise further questions. For example, what kind of termination of the student loan? Is this a deliberate termination of the student loan? Large-scale termination of the student loan? How Much Student Loan Forgiveness? Will everyone qualify for student loan foreclosure, or will it only focus on low-income student loan borrowers? (Biden removed the student loan cancellation from the budget). Psaki also said during the podcast that Biden still prefers Congress to enact a large-scale cancellation of $10,000 in student loans. (The termination of the student loan may look different than expected). Why? If Biden tries to push through a large-scale student loan freeze, it could lead to legal challenges in court, which could delay implementation. Alternatively, a future Republican president could issue an executive order to stop student loan cancellations. (Student Loan Easements: How to Qualify for a “Fresh Start” on Your Student Loans).
Despite this recent development, there is no guarantee that Biden will pause student loans for the fifth time or enact a large-scale foreclosure of student loans. Beginning September 1, 2022, student loan payments will resume for the time being. Are you prepared? Here are some of the best ways to take control of your financial life and pay off student loans: