AUGUSTA, Georgia (WJBF) – Due to the coronavirus pandemic, federal student loan payments were suspended in March, with no consequences for borrowers. The federal moratorium on student loans is now due to end on January 31.
“Essentially, the interest rates were set at 0%,” said Andrew Pentis, senior writer for Student Loan Hero. “The promise was made that if you had a federal student loan and qualified for this program, not making payments would not penalize you in any way, so there would be no negative impact on your credit report. . “
The Biden administration has proposed a potential plan to cancel federal student loans of $ 10,000, as well as an extension of the payment break.
“It would be a huge wave of relief for millions of student loan borrowers, as millions of student loan borrowers in this country have balances of $ 10,000 or less, which would completely write off their debt,” said Pentis. “Even for borrowers who currently have over $ 10,000 in student loan debt, and many borrowers do, many borrowers have six figures of student loan debt, even for them it would reduce their debt and their balance would go down. . Their monthly payment would go down with that, and hopefully their monthly payment and overall payment would become more manageable. “
The proposed $ 10,000 federal loan forgiveness plan could have a big impact on Georgia. In a recent study, Georgia ranked third in highest student loan debt by state, with an average balance of just over $ 39,000. That’s 7 percent more than the US average.
But Pentis says it wouldn’t be wise to hang on to a plan to pay off your student debt in the hopes of a forgiveness plan or an extended moratorium.
“The Biden administration, for example, presented a stimulus proposal yesterday and this idea of a $ 10,000 student loan cancellation policy was not included,” Pentis said. “Even if this forgiveness or something like that comes to pass in the future, it’s likely that borrowers will have to wait a while and therefore the best thing to do is figure out what’s the best thing for you to do for you. payment. instead of just waiting for massive relief.
While there is speculation about what the Biden administration might do, for now, the payment hiatus is expected to end on January 31.
“The Biden administration announced that it would extend the moratorium on the first day of its administration,” Pentis said. “It just remains to be seen exactly what the details of this would be, when the moratorium would be extended, and whether other federal student loan borrowers would become eligible.”