Biden should ‘unilaterally’ cancel student loan debt, says Obama education secretary
Student debt is a costly burden for millions of Americans who are expected to resume federal loan repayments in May. In recent months, a growing number of Democrats have called on President Joe Biden to keep his campaign promise to cancel student loans before forbearance expires.
The latest is John B. King, Jr., who served as Secretary of Education under former President Barack Obama and is currently running for governor of Maryland. King urged Biden to “use his executive power to unilaterally write off every borrower’s student debt” in a recent editorial.
“Too often, the crushing weight of student debt keeps people from even considering buying a home, raising a family, or starting a new business,” King wrote. “It is unquestionably a crisis.”
Despite pleas from prominent lawmakers, the Biden administration has yet to announce its intention to provide student loan forgiveness via executive action. The White House recently hinted that the president is counting on Congress to push forward student debt cancellation. And in particular, the President did not mention cancellation of student debt during his first State of the Union address on March 1.
Keep reading to learn more about the likelihood of student debt forgiveness and consider your alternative options like income-contingent repayment (IDR) and student loan refinancing. You can compare student loan refinance rates on Credible for free without affecting your credit score.
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King: ‘Bold actions’ needed to solve student debt crisis
While student debt relief is “a realistic solution that can transform millions of lives,” King said, it’s just a proposal that should be followed by “even bolder actions.” to deal with the student debt crisis in the future.
King advocates a debt-free public college for low- and middle-income students, as well as a “truly affordable college for everyone.” This includes the tuition-free community college, which was proposed by the Biden administration.
However, more than a year into his presidency, Biden has struggled to implement policies that would make higher education more affordable.
Free community college was not included in the Build Back Better Act, which failed to gain enough support in the Senate. And although the Department of Education has approved $16 billion in student loan cancellations since Biden took office, widespread debt cancellation has yet to be achieved.
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Expiration of student loan forbearance threatens borrowers
The Department of Education has extended the federal student loan payment pause three times under Biden, but that relief is expiring soon.
“While postponing the restart of federal student loan repayments until May 1 provided significant temporary relief, a dark cloud still hangs over millions of borrowers,” King said.
The Biden administration has not announced plans to provide further student loan relief, either by canceling student debt or extending forbearance again. Without lawmakers canceling student loans, millions of student borrowers will have to prepare to resume their monthly payments.
One strategy is to consolidate into a private student loan with better terms. Refinancing at a lower rate can help you lower your monthly payments and save money over time. But it’s important to note that refinancing your federal student loan debt will make you ineligible for government protections, like IDR plans and some student loan forgiveness programs. You can read more about student loan refinancing on Credible.
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How student borrowers can prepare for payments in May
The vast majority (93%) of student borrowers said they were not financially ready to resume payments in May, according to a recent survey by the Student Debt Crisis Center. If you’re not ready for the end of forbearance, consider these strategies:
- Sign up for a income-based repayment plan to limit your federal student loan repayments to between 10% and 20% of your disposable income, depending on the type of loans you have.
- Defer your federal student loans up to 36 additional months. Keep in mind that interest may accrue on your loans during the deferral, which adds to the overall cost of borrowing.
- Reduce your monthly payments by refinancing a private loan with a lower interest rate. You can use Credible’s student loan refinance calculator to estimate your new monthly payments.
While student loan refinancing can help you get a lower interest rate on your student debt, it’s not for everyone. For example, federal borrowers who wish to enroll in the Public Service Loan Forgiveness Program (PSLF) do not need to refinance a private loan.
If you don’t plan to use federal benefits or already have private student loan debt, refinancing may be an option to consider. You can browse the current refinance rates from private student lenders in the table below. Then you can visit Credible to compare offers that are right for you with a soft credit application.
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