Biden Student Loan Pause :
Student loan debt reached approximately $1.6 trillion by the end of 2016, according to the Federal Reserve Bank of New York. Biden’s new order extends the student loan freeze through September 30 to help alleviate the financial burdens caused by COVID-19. Under the new executive order, no additional interest will be accrued on student loans and no additional money will be collected for loans that have been defaulted.
Will this negatively affect student loans?
If you have federal student loans owned by the U.S. Department of Education (ED), you won’t have to make monthly payments on your loans. As of September, 0% interest rates are in place on all loans. Only government-issued student loans are not included in this freeze.
Students who are still in school benefit from Biden’s student loan freeze, even if they haven’t been accepted yet. Loans made directly to students with no parent contribution typically accrue interest while students pursue higher education degrees. The pause also benefits students who are enrolled in a college programme because they get 0% loan interest rates during the pause. Students may call their loan servicer to inquire about their loan qualification.
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Freezing the student loan balances of graduates within six months of receiving their degrees also applies to students within the six-month grace period post-graduation. If a student’s grace period expires before March 13, 2020, their payments and interest rates stop when the coronavirus relief period is over.
Payment collections and interest accrual will resume on January 20, 2020, unless the President does something further.
Students should begin developing a repayment plan now to help ease their return to monthly payments once the fall semester arrives.
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