WASHINGTON (WSFA) - On his first day in office, through executive order, President Joe Biden suspended federal student loan payments and interest through Sept. 30.
This comes just days before the current moratorium is set to expire on Jan. 31.
This means that:
· No federal student loan payments are owed
· No new interest will accrue on your federal student loans
· No student loans in default will be collected
When Congress passed a relief bill (the CARES Act) in March, it automatically suspended student loan payments and waived interest. The benefit was originally set to expire in September but was extended by the Trump administration until Jan. 31.
Borrowers will now not have to make payments until Oct. 1.
It is important to note that you can still keep paying your loan if you would like, but auto-debits have been suspended. You may need to contact your servicer to make manual payments
Jim Purcell, executive director of the Alabama Commission on Higher Education, said the extension will be beneficial for those who are struggling financially during the COVID-19 pandemic.
“Differing interest and payments until September makes sense during a difficult time, a lot of these students are coming right out of college or looking for their first job and that job might not be there,” Purcell said.
However, Purcell said prolonging payment of the loan could mislead students into thinking their debts never have to be paid.
“I am concerned about providing too much debt relief that would communicate to young people that their obligations can be washed away,” Purcell said.
Right now, more than 40 million Americans currently hold $1.6 trillion in student loan debt. Purcell said conversations about the cost of higher education need to be addressed.
“I do believe it’s a way for us to have a more national conversation about how the cost of education, especially higher education, has risen so much,” Purcell said.
Biden has also said he wants to forgive $10,000 of student loan debt per person, but many congressional democrats want up to $50,000 forgiven.
Purcell said the $10,000 amount is fair, but $50,000 is a bit high.
“I do believe the calls to forgive up to $50,000 in debt is kind of odd,” Purcell said. “That level of debt sort of requires for you to say ‘I want to go to a more elite college with high tuition or live off-campus in a fancy apartment.’
Biden has also mentioned wanting to make college tuition-free for some, including those who attend a public college or university and come from a family that makes below $125,000 a year.
Also for those who attend a private minority-serving institution.
He has also proposed tuition-free community college for two years.
Purcell said he does not believe it is a good idea for tuition to be totally free. He said he doesn’t think it could be done without negatively impacting the economy.
“Nothing is free,” Purcell said. “Somebody has to pay for that. If it’s not at the state level, it’ll be all of us distributed throughout the country having our fair share.”