College students heading to campus this fall may be confused by the recent headlines about student debt and wondering: does this affect me?
Will the suspension of student loan repayments that began early in the pandemic be extended? Will it eliminate some student debt?
“It’s a very confusing time,” says Reagan Fitzgerald, manager of the Pew Charitable Trusts’ Student Borrower Success Program.
Here’s a summary of what’s known and what’s unknown, and what students should consider
The suspension of payments and interest on most federal student loans is scheduled to end Aug. 31. Financial aid experts say the forbearance will have less of an impact on students who are still in school because they have not yet repaid their loans. (However, even in-school borrowers can benefit from the loan interest moratorium.)
While it is unclear whether the Biden administration will act to forgive some student debt, any relief is likely to be limited. It could target borrowers whose incomes fall below a certain limit and who borrowed before a given date (possibly by June 30 of this year, according to Politico) – suggesting that students who recently borrowed in the 2021-22 academic year could benefit. But until the plan is announced, “we’re not sure what the parameters are,” Ms. Fitzgerald said.
A Department of Education spokesman said in an e-mailed statement that the department’s “review of broad debt cancellation is still ongoing and no decision has been made.”
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Ms. Fitzgerald said it is important for borrowers to keep pace with student loan options and policies because the rules seem to be constantly changing. “Financial awareness around student loans is very important,” she says.
Michele Streeter, senior director of college affordability at the Institute for College Access and Success, said students borrowing money for the fall should focus on what they need rather than guessing whether some debt can be eliminated.
“I would strongly advise anyone not to borrow money on the assumption that any loan will be forgiven in the future,” Ms. Streeter said. “If I were a borrower, I would turn off the noise and focus on what I need to borrow now.”
