Is Hope for Student Loan Forgiveness Fading?
On October 27, 2021, The Voice published an article on student loan forgiveness and the promises made by the new presidential administration, which took office a year ago. As a major part of his campaign, Joe Biden vowed that if he was elected, most (if not all) student loans would be forgiven for every borrower.
President Biden stated in 2020 that $10,000 per student loan borrower should be canceled immediately, based on the well-known fact that student loans inhibit millions of borrowers from achieving financial stability. In two years, one of which Biden has had the authority to act on his campaign promise, it has yet to happen.
In addition, repayments on student loans have once again been paused. This time, repayments resume on May 1, 2022. Another halt on student loan repayments is beneficial to millions of Americans, however, with interest rates set to increase as many as three times this year due to inflation, some borrowers will feel more financial strain upon resumption of repayments.
For borrowers who have a fixed interest rate, the increase won’t be an issue. For borrowers who do not have fixed interest rates, payments will potentially become more expensive. Borrowers who have federal loans which were issued after July 1, 2006, will also not see an increase in price, as federal loans issued after this date have fixed interest rates. Each year, interest rates on student loans are reset on July 1 for loans with variable interest rates.
To date, President Biden has approved $11.5 billion in loan cancellations for approximately 600,000 borrowers. This is only a small portion of the $1.6 trillion student loans that Americans have accumulated altogether.
While we have yet to see what promises will be upheld, it is obvious that hope for complete student loan forgiveness for all borrowers may be beginning to fade. All we can do now is wait and see what happens in the months to come.
The previous article on student loan forgiveness can be found here: https://www.eou.edu/voice/2021/10/27/hope-may-be-looming-on-the-horizon-for-student-loan-forgiveness/