The deferral of federal student loans is not extended in the COVID-19 Economic Act

WASHINGTON (Gray DC) – The $ 900 billion, 5,593 page stimulus bill does not address student loan debt. Millions of student loan borrowers may need to resume federal student loan payments on February 1.

In March, Congress passed the CARES bill, which postponed federal student loans, waved interest rates, and halted the collection of defaulted loans through September 30.

In August, President Donald Trump signed a presidential memorandum extending student loan facilitation through December 31. Then, earlier this month, Education Minister Betsy DeVos extended the deadline to January.

Now the borrowers of the federal student loan have to pay on February 1st. However, according to Betsy Mayotte of the Institute of Student Loan Advisors, there is a possibility that President-elect Joe Biden could step in after inauguration.

“We think President Joe Biden will renew, it’s just a matter of when,” Mayotte said.

When the grace period ends, Mayotte expects high default rates.

“Borrowers have fallen out of the habit of repaying,” Mayotte said. If you look at research, the habit of making a payment is an important indicator of long-term success in managing student loans. Now all borrowers have fallen out. “

According to the Federal Reserve, Americans face $ 1.7 trillion in student debt. There are several other measures designed to help borrowers moving around Washington.

Senator Tammy Baldwin (D-Wis.) Investigated fraudsters in her latest bill. The Stop Student Debt Relief For Student Act Will improve law enforcement and administration skills to identify and prevent student debt relief fraud. The law has been passed by both the House of Representatives and the Senate and is awaiting the President’s signature.

“When you start a new government program, it’s almost a signal for scammers and scammers to say, ‘Oh, we’re here to help,’ but they’re only doing it for their own financial gain,” said Baldwin.

In the election campaign, President-elect Joe Biden supported a proposal to cancel US $ 10,000 federal debt per person. However, Mayotte says borrowers shouldn’t expect forgiveness.

“Borrowers shouldn’t make financial decisions based on the fact that there might be relief at some point,” Mayotte said.

She suggests using the deferral period and, if necessary, discussing refinancing options.

Copyright 2020 Gray DC. All rights reserved.

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