Student Loan Payments Freeze: Here's How Long You Don't Have To Worry About Your Student Debt

The Biden administration has extended the federal student loan payments freeze again. The student loan forgiveness program started in March 2020, aiming to help financially struggling people due to the COVID-19 pandemic.

The extension comes as the Biden administration's student loan forgiveness program is stalled in court, per CNN.

Officials had informed borrowers that the program, which could provide up to $20,000 in debt relief for each borrower, would be in place before loan payments resumed in January. The payments freeze will be in effect for 60 days after the lawsuit's conclusion.

Payments will resume 60 days after June 30 if the program is not implemented and the lawsuit is not settled, according to the Department of Education.

President Joe Biden said of his plan to cancel student loans in a video shared on Twitter on Tuesday, "I'm completely confident my plan is legal."

"But it isn't fair to ask tens of millions of borrowers eligible for relief to resume their student loan payments while the courts consider the lawsuit," he said.

The Department of Justice requested the Supreme Court last week to intervene and reinstate the student debt forgiveness program until the legal challenges are resolved. On November 10, a lower court judge in Texas ruled against the program.

Student Loan Forgiveness Has Been Paused Multiple Times

The Department of Education has already extended the pandemic-era support program eight times.

Federal student loan payments have been frozen since the coronavirus epidemic first hit the United States in March 2020, significantly affecting the economy.

The burden of resuming payments will be considered for more than 40 million Americans. The Biden administration planned to ease the transition by initially canceling a significant percentage of student debt.

However, immediately after Biden announced his comprehensive plan to cancel up to $20,000 in student debt for millions of Americans, many conservative groups and states with Republican support filed a legal challenge to the idea.

According to CNBC, two of these cases have temporarily halted the relief, and the Education Department has suspended its loan cancellation application page this month.

What Does the Student Loan Payments Freeze Extension Mean to Borrowers?

The head of an advocacy group called the Student Borrower Protection Center, Mike Pierce, said that this extension means "struggling borrowers will be able to keep food on their tables during the holiday season and the coming months." This is especially important as the U.S. economy struggles with inflation, rising interest rates, and a possible wave of unemployment.

Expert on student loans Robert Farrington reiterated his constant advice to borrowers: Be ready and get organized.

Even though it is improbable, Farrington added that if the legal disputes are settled by June 30, there is a potential that the payment suspension may also end earlier than expected, so borrowers should be ready for that scenario. He also advised borrowers to subscribe at ed.gov/subscriptions to receive updates from the Department of Education, Time reported.

If you have a federal student loan debt and payment plan, check them at the start of 2023 to see if they are the most beneficial option for your current financial situation.

Farrington also said that borrowers entitled to a refund are encouraged to contact and submit a request as soon as possible. Investing your tax return in a high-yield savings account might net you hundreds of dollars in interest by next June.

"That could be over $300 in free money borrowers are leaving behind by not making that phone call," Farrington said.

When possible, start putting away a portion of your monthly income that would go toward paying off your student loan debt into a high-yield savings account to smooth the financial transition into repayment.

This way, you can earn interest on your savings while waiting for the payment suspension to end.

The money you save can go toward paying down your student loan debt balance or saving for an emergency when the government forgives your debt.

Borrowers potentially qualified for the Public Service Loan Forgiveness program should have their job status validated. This, according to Farrington, is done so that even months in which payments are temporarily withheld will count toward PSLF credit.

This article is owned by Latin Post.

Written by: Bert Hoover

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