If you don’t get your student loan cancellation from President Joe Biden, do these 3 things instead.
Here’s what you need to know and what it means for your student loans.
Biden has now canceled nearly $ 10 billion in student loans since becoming president, which has helped write off student loans for hundreds of thousands of student loan borrowers. If your student loans have been canceled, you are part of a group of student loan borrowers who have escaped the shackles of student debt. (Find out here if you qualify for nearly $ 10 billion in student loan cancellations). For most student loan borrowers, however, a large-scale student loan forgiveness is unlikely to become a reality. If Biden or Congress doesn’t cancel your student loan debt, the good news is you have other options. Instead, do one of these 3 things:
1. Obtain a student loan forbearance or a student loan deferral
Student loan relief from the Covid-19 pandemic will end on January 31, 2022. The Biden administration previously extended this Cares Act student loan relief twice for one year. As a result, effective February 1, 2022, the temporary student loan forbearance will end and regular student loan payments will resume. That said, if you are having economic hardship, you can still get your federal student loans forborne or postponed. However, it is important to understand the difference between student loan forbearance and student loan deferral. While both options allow you to temporarily defer your student loan payments, they can have a different impact on your financial situation. If your student loan is deferred, no interest will accrue on your student loan balance. If you are forborne, interest will accrue on your student loan balance. You can apply for student loan forbearance and student loan deferral through your student loan officer.
2. Get a student loan discount
Large-scale student loan cancellation is not the only type of student loan cancellation. There are several federal and state student loan exemption programs. (Here’s where to get a student loan discount). Biden canceled student loan debt on a targeted basis, with further student loan cancellations to follow. Find out if you may qualify for the Biden Student Loan Waiver. To date, Biden has primarily canceled student loans for student loan borrowers with total and permanent disabilities. Biden also canceled student loans for student loan borrowers who were misled by their college or university under the defending student loan borrowers rule. The public service loan forgiveness program is another option for obtaining student loan forgiveness for federal student loans. If you qualify, you can have your federal student loans canceled after making 120 monthly payments and working full-time for a qualified utility or non-profit employer. Although this program has a staggering 98% rejection rate, the Biden administration is working on ways to extend access to student loan forgiveness to more student loan borrowers. (Here are 17 ways Biden can fix student loan cancellation).
3. Refinance your student loans
Refinancing a student loan is one of the smartest ways to save money on your student loans. Refinancing a student loan allows you to get a lower interest rate, a lower monthly payment, or both. With student loan refinancing, you can choose a fixed or variable interest rate as well as a student loan repayment term of 5 to 20 years. You will also have an interest rate, a monthly payment, and a student loan manager.
This student loan refinance calculator can show how much money you can save on your student loans. For example, suppose you have $ 80,000 in student debt with an interest rate of 7% and a repayment term of 10 years. If you refinance your student loans at 3% with a 10-year repayment term, you’ll save $ 156 each month and $ 18,766 in total. Student loan refinance rates are incredibly low now, starting at 1.88%.
If you are planning to apply for a utility loan forgiveness, income-oriented repayment plan, forbearance, or deferral, you may not want to refinance federal student loans. Why? When you refinance student loans, you get a new private student loan to pay off your old student loans. So if this applies to you then you could only refinance private loans. However, for student loan borrowers who don’t plan to use these options, refinancing private and federal student loans can save you the most money. To be eligible for student loan refinancing, you generally must be employed or have a job offer, have a stable monthly income, and a credit score of at least 650. If you do not meet these conditions, you can apply with a co-signer who does, and they can help you qualify and possibly get a lower interest rate.
Don’t expect a large-scale student loan forgiveness. Instead, make sure you understand all of your student loan repayment options. Here are some smart ways to save money: