Although there are indications that the suspension of payments and interest on most federal student loans will be extended past the end of this month, the specifics surrounding loan forgiveness remain unknown.
Students who are going to school this fall might be concerned by recent headlines about student debt and ask: Is any of this my business?
Will the suspension on student loan repayments announced early in the epidemic be prolonged? Will any student debt be forgiven?
“It’s a very confusing time,” said Regan Fitzgerald, manager of the Pew Charitable Trusts’ project on student borrower success.
Here’s a summary of what is known and unknown, as well as where students should direct their attention.
On August 31, the government’s pause on payments and interest on most federal student loans is set to expire.
Because younger students aren’t yet repaying their loans, an extension would have a lesser impact on those still in school. Financial aid experts believe that this is the case. (Even in-school borrowers are benefiting from the moratorium on loan interest.)
While it’s still unclear whether the Biden administration will forgive student debt, any relief would most likely be modest. The plan may be tailored to borrowers with income below specific thresholds and loans taken out before a certain date, suggesting that students who borrowed in the 2021-22 school year or later would benefit (according to Politico).
But until plans are announced, “we are not sure what the parameters will be,” Ms. Fitzgerald said.
The Education Department’s “review of broad-based debt cancellation is ongoing, and no decisions have been made,” according to an emailed statement.
Because the regulations seem to be changing at a rapid pace, borrowers must stay on top of student loan alternatives and rules. “Financial awareness about student loans is critical,” Ms. Fitzgerald added.
Michele Streeter, a senior director of college affordability at the Institute for College Access and Success, a nonprofit that promotes college access and success, advised students who are borrowing money for the fall to focus on what they require rather than wondering whether any debt might be removed.
“I would strongly urge that no one borrow on the assumption that any debts will be forgiven in the future,” Ms. Streeter added. “If I were a borrower, I would turn off the noise and focus on my immediate requirements.”