student loan debt, Student Loans

What Is Next for Student Loans in the Covid Era?

Student loans have been at the forefront of the COVID-19 relief offered through the federal government. The biggest source of relief came in the moratorium on federal student loan repayments issued by the Biden administration and was extended through the end of 2021. However, this moratorium is expected to end January 31, 2022, leaving many student loan borrowers left to wonder what is next.

It is estimated that $1.5 trillion in student loan debt is now owed collectively by U.S. student borrowers. Therefore, these measures have widespread effects for many American consumers.

According to representatives from the Student Borrower Protection Center with the Consumer Financial Protection Bureau (CFPB), the reason behind setting a future date for the moratorium to expire as of January 31, 2022, was to give borrowers a chance to plan ahead for these payments to resume. By starting up too soon while the pandemic has continued to present a problem for many Americans, the results would have been devastating.

According to the CFPB, one in every four borrowers were behind on their student loan payments before the COVID-19 pandemic hit. Borrowers were already struggling to make ends meet and continue paying on their mounting student loan obligations. The virus only made that crisis worse, putting countless American consumers in precarious financial situations.

Student loan advocates argue that the current administration needs to help borrowers even more than providing a temporary moratorium during a national crisis. Without this help, the situation, they fear, is only going to worsen.

One example of the problem, according to the CFPB, is the Public Service Loan Forgiveness Program. Many borrowers went into careers in public service under the belief that they would have their loan obligations forgiven after a set number of years. However, nine out of 10 applications for loan forgiveness have been denied even though millions of borrowers say they have fulfilled their end of the bargain with the Public Service Loan Forgiveness Program.

Forgiveness for disabled student loan borrowers has similarly been an issue. However, recently, the U.S. Department of Education successfully forgave student loan debts for up to 300,000 disabled borrowers. Student loan advocates argue that this is only a drop in the bucket and that countless more desperately need that aid, including borrowers who were defrauded by predatory lenders through for-profit universities.

Additionally, the CFPB is keeping an eye on a new problem that has recently become a concern. Predatory education finance companies have begun to reach out to borrowers, trying to fill what they see as a space left by banks, by offering income share agreements, which requires the borrower to turn over a portion of his or her future income to finance his or her higher education.  These programs leave a great deal of room for abuse of the system since they are not covered by traditional financial protections under most student lending.

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For borrowers who are struggling with student loan debt, relief options are available.  Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt.  It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at

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