President Joe Biden has shown an appetite for helping out America’s student loan borrowers.
The U.S. Department of Education just reported that it has approved $9.5 billion in student loan discharges since January — lightening the burdens of 563,000 borrowers who now have more ability to increase savings, invest money and deal with other debts.
If you haven’t been paying attention, you might even qualify for some of that student loan relief. But what happened to the idea of wiping out debt for every borrower?
Waves of student loans have been canceled
The Biden administration has been making announcements throughout the year as it has canceled student loan debt for select groups of borrowers.
Its most recent move involved $1.1 billion in loan forgiveness for 115,000 students who attended, and were misled by, ITT Technical Institute before it filed for bankruptcy in September of 2016.
“ITT’s malfeasance drove its financial resources away from educating students in order to keep the school in business for years longer than it likely would otherwise have, resulting in debts that are being discharged starting today,” the Education Department said on Thursday.
The department’s news release also revealed that a total of $9.5 billion in debt has been erased so far this year.
That amount has included:
Additionally, the Department of Education has paused all student loan repayment, interest and collections through Jan. 31, 2022; and has waived student loan interest for 47,000 current and former active-duty members of the military.
Tens of millions still want loan forgiveness
But the administration’s debt forgiveness to date is teensy compared to the total $1.7 trillion in student loan debt currently being carried by 45 million Americans.
During his presidential campaign, Biden said he would like to cancel $10,000 in federal student loan debt for every borrower. High-profile Democrats in Congress, including Massachusetts Sen. Elizabeth Warren and Senate Majority Leader Chuck Schumer, have been urging him to go bigger — by wiping out $50,000 per person.
Biden reportedly asked Education Secretary Miguel Cardona to determine whether a president can legally forgive large swaths of student debt through executive action. That was back in April, and there’s been no further word.
The president and Congress have been focused on other matters: infrastructure, Afghanistan, the pandemic. The House and Senate have approved $3.5 trillion budget blueprints that will be filled in with social spending, but so far the plans don’t include any student debt cancellation.
Advocates for widespread forgiveness say reduced student debt loads will benefit the U.S. economy as a whole, because it will free up cash that borrowers can put toward major purchases, like homes and cars; the launching of new businesses; and further investments in their futures.
Other ways to tackle your student debt
If your student loans haven’t been eliminated by any of the Biden Education Department’s cancellation moves, there are other ways you can manage the debt as you wait for the president to act.
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Interest rates on student loan refinances through private lenders are historically low right now. Refinancing your student loan could reduce your monthly payments significantly. If broad federal loan forgiveness ever does materialize, it won’t extend to refinance loans from private lenders.
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If you own a home, it’s an excellent time to consider refinancing your mortgage. With 30-year fixed mortgage rates currently averaging less than 2.90%, the mortgage technology and data provider Black Knight has estimated that around 14 million homeowners could save an average of almost $300 a month by refinancing.
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If a student loan or mortgage refi has piqued your interest, keep in mind that the best interest rates go to borrowers with the highest credit scores. Take a quick, free look at your credit score and see if there’s a need to improve it before you start reaching out to lenders.
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Even if your budget’s stretched, you might squeeze a little extra income out of the record-shattering stock market. A popular app helps you invest in a diversified portfolio using just your “spare change” from your everyday purchases.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
