Everything You Need to Know About Student Loans
Debt Tiers
Student loans have been in focus in recent years given many Americans are in debt after attending school, all while the cost of higher education continues to increase. President Joe Biden made student loan debt cancellation a point of his campaign, and has expressed his support toward forgiving balances up to $10,000.
The natural question is then, who stands to benefit? Data gathered by The Washington Post suggests just over a third of all borrowers would have their debt completely wiped away, as 33% owe less than $10,000. The largest group, accounting for 59% of all borrowers, owes between $10,000 and $100,000. Finally, just 7% owe more than $100,000.
Loan Servicers
Legislation has been introduced in Congress that would make major changes to student loans. In the meantime, the Biden administration temporarily expanded PSLF last October, also known as Public Student Loan Forgiveness. This program allows public employees and people who work for select nonprofits to qualify for loan forgiveness, provided they meet specific requirements including loan type and payments being made over 120 months.
There has been some confusion lately in regards to PSLF, as well as a number of complaints. Some say deadlines have been botched and others claim they weren’t told about certain requirements. Now there’s a new wrinkle as the company servicing the loans seeking PSLF has changed. Rather than FedLoan, these accounts will be serviced by MOHELA. Advisors note that doesn’t change much, other than the company’s name on your account.
Restart on the Horizon
We’re now just over a month away from when the COVID-19 moratorium on student loan payments will expire. Come September 1, borrowers are expected to resume making at least their minimum payments. According to a survey from YouGov, 51% of respondents support forgiving student loan balances up to $10,000. But Congress isn’t likely to make a move by the end of next month, so it’s best to consider your options.
First and foremost, if you qualify for Public Student Loan Forgiveness, you must apply by October 31st. Also, interest rates are rising while the Fed looks to combat inflation, so now could be a good time to consider refinancing before rates go even higher.. And with SoFi, you can refinance just a slice of your federal student loan, and leave the rest in your federal loan account for the possible forgiveness you’ve been waiting for.
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