WASHINGTON (Gray DC) - The $900 billion, 5,593-page stimulus bill does not address student loan debt. Millions of student loan borrowers might be required to resume federal student loan payments on February 1st.
In March, Congress passed the CARES Act, which provided federal student loan forbearance, waived interest, and stopped collections on defaulted loans through Sept. 30th.
In August, President Donald Trump signed a presidential memorandum extending the student loan relief through Dec. 31st. Then, earlier this month, Secretary of Education Betsy DeVos extended the deadline through January.
Now, federal student loan borrowers will have to pay up on February 1st. But, according to Betsy Mayotte of the Institute of Student Loan Advisors, there’s a chance President-elect Joe Biden could step in after the inauguration.
“We do think President Joe Biden will extend, it’s just a question of when,” said Mayotte.
When the forbearance period ends, Mayotte says she is expecting to see high delinquency rates.
“Borrowers have fallen out of the habit of repayment,” said Mayotte. If you look at the research, a big indicator of long-term student loan management success is just the habit of making a payment. Now, all the borrowers have fallen out of that.”
According to the Federal Reserve, Americans face $1.7 trillion in student debt. There are several other measures intended to assist borrowers floating around Washington.
Sen. Tammy Baldwin (D-Wis.) went after scammers in her recent bill. The Stop Student Debt Relief Scams Act will enhance law enforcement and administrative abilities to identify and shut down student debt relief scams. The legislation passed both the House and Senate and is awaiting the President’s signature.
“When you start a new government program it’s almost a signal to fraudsters and scam artists to say, ‘Oh we’re here to help,’ yet they are only in it for their own financial gain,” said Baldwin.
On the campaign trail, President-elect Joe Biden backed a proposal to forgive $10,000 in federal debt per person. However, Mayotte says borrowers should not anticipate forgiveness.
“Borrowers should not be making financial decisions based on the fact there might be relief at some point,” said Mayotte.
She suggests you take advantage of the forbearance period and discuss refinancing options if necessary.