Extension on Student Loans
Back in September, we discussed how President Biden’s plan to forgive student loans could extend to over eight million Americans. The specific package that was announced was one in which upwards of $20,000 could be awarded for each student, given they make less than $125,000 or if the heads of households earn less than $250,000. This automatic loan cancellation would occur within six weeks for those who have their income data filed with the IRS. When this occurred, much controversy arose, with lawsuits popping up seeking to block Biden’s plan altogether. The Pacific Legal Foundation, the plaintiff, claims that the executive branch has no authority to create a new forgiveness policy, as this undermines the legislative power of Congress. They assert that the plan would also require several borrowers across the nation to pay new local tax bills. Regardless, the $400 billion dollar plan will be set to span over 30 years in helping to alleviate financial situations for millions of Americans, but the economic consequences of such a large package will be unknown until it comes into effect.
More recently, the Biden administration has announced that it will extend the payment pause on federal student loans until after June or when it’s able to move forward with its debt forgiveness plan. Originally, Federal student loan bills had been scheduled to resume in January. The administration explained the move in a statement, saying: “We’re extending the payment pause because it would be deeply unfair to ask borrowers to pay a debt that they wouldn’t have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests”.
What do you think about the extension? Is it the right move?
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.