The Biden administration is erasing billions of dollars more in student loan debt, cleaning the slate for hundreds of thousands of Americans.
The announcement is the largest this year so far by the U.S. Department of Education, which has now written off a total of nearly $ 9 billion in student loans since President Joe Biden took office in January. With their balances depleted, borrowers are better able to save, invest, or pay off other debts.
Meanwhile, tens of millions of Americans continue to wait for news about whether the president will grant large-scale student loan forgiveness.
A new pardon is granted to disabled borrowers
The new debt cancellation, totaling more than $ 5.8 billion, extends to more than 323,000 people with severe disabilities, says Secretary of Education Miguel Cardona.
“Today’s action removes a significant barrier that prevented too many disabled borrowers from receiving the permanent and total disability exemptions to which they are entitled under the law,” Cardona explained in a press release Thursday.
From now on, borrowers who are identified by the Social Security Administration as having a “total and permanent” disability will have their federal student loan debt automatically discharged; They will not need to complete an application for relief, and the department won’t ask for information about your income.
“We have heard loud and clear from borrowers with disabilities and advocates about the need for this change and we are excited to move forward,” says Cardona at the release. “This change cuts red tape to make processes as simple as possible for borrowers who need support.”
Previous actions forgiven about $ 2.9 billion in student debt
Earlier this year, the administration eliminated $ 1.3 billion in student debt held by severely disabled borrowers whose canceled loans were reinstated after they did not provide details on their earnings.
Some other waves of student loan forgiveness in 2021 applied to borrowers whose schools made false promises or abruptly closed.
Officials say that with the latest action, the administration has eliminated roughly $ 8.7 billion in student loan debt for around 455,000 Americans.
The Department of Education also recently extended the pandemic pause in federal student loan payments and interest, for what is called one last time: until January 31. The moratorium was scheduled to end next month.
Broad student loan forgiveness remains a question
But many, if not most, of the 42.9 million Americans who have $ 1.59 trillion in federal student loan debt, according to Data from the Department of Education – You want more than a temporary freeze. They have the broad student loan forgiveness that Biden campaigned on.
You’ve always said you want to pay off $ 10,000 in student debt per borrower. High-profile Democrats in Congress, including Senate Majority Leader Chuck Schumer and Massachusetts Sen. Elizabeth Warren, have been urging him to go further and erase $ 50,000 per person.
So far, there has been no movement on large-scale debt forgiveness. Biden reportedly asked Secretary Cardona to study whether a president has the authority to forgive a $ 50,000 debt on his own, but that was months ago.
Lawmakers and advocates advocating the generous relief say it would provide a more meaningful break from crushing student debt that has kept people from buying homes and cars, getting married and investing for the future.
How to Deal With Your Student Debt Right Now
If you’re not one of the hundreds of thousands whose student loans have been canceled this year, here are some ways to financially fight overwhelming student debt.
You may want to look into refinance your student loans. Interest rates on student loan refinances from private lenders have historically been low this year, so replacing your debt with a new private loan could lower your monthly payments. But keep in mind that if federal loan forgiveness ever occurs, it won’t extend to private refinanced loans.
If you own a home, consider refinance your mortgage. With 30-year rates averaging less than 2.90%, about 14 million mortgage holders could save an average of about $ 300 per month refinancing, according to mortgage technology and data provider Black Knight.
The best rates are awarded to borrowers with the highest credit scores. If you haven’t seen your score in a while, today you can easily get a take a look at your credit score for free.
Another way to give yourself a financial break is with some low risk investments in the stock market. A popular app helps you build a diversified portfolio investing only “spare change” of your daily purchases.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.