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.

student loan debt, Student Loans

Biden Administration Cancels Almost $10 Billion in Student Loan Debt. Who Got Relief?

In total, the Department of Education has approved discharging $8.7 billion in student loan debt for more than 450,000 borrowers.

Click here to see if you are eligible.

That amount has included:

  • $7.1 billion for borrowers who were eligible for relief because of “total and permanent disability.”
  • $55.6 million in loan discharges for students who attended three trade schools that officials said misrepresented themselves to students.
  • Another $1 billion for other students defrauded by their schools.

The Biden Administration has cancelled nearly $10 billion in student loan debt since January 2021, according to the U.S. Department of Education. The Department reported they have approved $9.5 billion in student loan discharges since January 2021, affecting approximately 563,000 borrowers.  This has given borrowers the ability to tackle other debts, invest and increase savings.

student loan debt, Student Loans

Student Loan Payment Pause Extended to 2022

The Biden administration has announced that the moratorium on federal student loan payments would be extended through January 31, 2022. This announcement came just over a month before the pause was set to expire at the end of September. According to the Department of Education, this extension is the final one that will be issued.

The moratorium was first put in place in March 2020 after Congress passed the CARES Act. The moratorium paused payments through the end of September 2020, keeping all federal student loan interest rates at zero percent, affecting approximately 42 million federal borrowers. President Trump then issued an executive order to extend the student loan payment pause through January 2021. As soon as President Biden took office, he issued another executive order extending the pause through September 30, 2021.

Please click here to read more.

student loan debt, Student Loans

Biden Administration Cancels Additional $55.6 Million in Student Loan Debt

The Biden Administration canceled an additional $55.6 million in student loans for 1,800 students who were found to be victims of fraud. This additional amount brings the total amount of student loan debt cancelled by the Biden administration to $1.5 trillion. 

Since entering office, President Biden has made it his mission to stand up for the thousands of students who were taken advantage of by for-profit colleges. This most recent effort was focused on students who attended Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute. Previously, the administration had approved loan forgiveness for students who attended ITT Technical Institute, the American Career Institute and Corinthian College. This is the first time the Department of Education has approved loan forgiveness for students attending for-profit schools not including these three.  

student loan debt, Student Loans

Former ITT Tech Students Receive Debt Relief from Biden Administration

The U.S. Department of Education announced Wednesday that 18,000 former ITT Technical Institute students who were found to be defrauded by the shuttered for-profit university will have their federal student loans cancelled in full. This move is a step in the right direction. The for-profit school closed permanently in 2016, leaving tens of thousands of students with massive student loan debt, and no degree.  

More than 30,000 former students petitioned the Department of Education to cancel their debt under the “borrower defense to repayment law.” However, even after being defrauded by ITT Tech, their claims were denied by officials under the Trump administration.  

student loan debt, Student Loans

Do Student Loans Have a Statute of Limitations?

When it comes to most debts, any time the individual who owes the debt stops making payments, the debt will then go into collections. At that point, the original creditor can make the decision to sue the person owing the debt for the remaining balance. However, the creditor only has so long to file that lawsuit. Like any other cause of action, a statute of limitations places restrictions on how long the creditor has to pursue collection of what is owed.  

Each state has its own statutes of limitations, but when it comes to federal student loan debt, federal law governs how this debt is collected. Federal student loans are not governed by the same rules as most consumer debts. In fact, federal student loans do not have a statute of limitations at all, no matter how old they may be.  

student loan debt, Student Loans

Debt Cancellation for Disabled Borrowers Reinstated by the Department of Education

The U.S. Department of Education announced recently that they will cancel federal student loan debt for borrowers who are no longer able to work due to disabilities. This announcement affects tens of thousands of borrowers currently paying on outstanding federal student loan balances.   

Student loan advocates say that this small step is the first of many to help reform the student lending system, including opening debt forgiveness to groups who are legally entitled to receive it but have not yet received debt forgiveness.  

student loan debt, Student Loans

Student Debt Cancellation Bill Scheduled to be Signed into Law this Week

Congress has passed a $1.9 trillion stimulus package that includes important provisions concerning student loan cancellation, as well as increased federal regulations on for-profit colleges.   

Several different objectives were met by Congressional leaders through the passing of this legislation. One of the biggest goals was to address the tax burden that student loan borrowers face when receiving any portion of their student loan debt forgiven. Up until now, whenever a borrower received forgiveness for any portion of his or her student loan debt, the amount that was forgiven was considered taxable income. Under this legislation, tax forgiveness will be treated as tax free for the next several years.  

COVID-19, student loan debt

New PPP Loan Rules Make It Easier for Student Loan Borrowers to Obtain Funds

New rules with respect to who can receive financial assistance through the Paycheck Protection Program (PPP) will open the door for struggling student loan borrowers who have previously been unable to qualify for the PPP loan program. These new regulations took effect on March 1, 2021.  

The funds received through the PPP were meant to offer financial assistance to struggling businesses, allowing them to stay in operation during the COVID-19 pandemic. For the most part, these loans are forgiven later. Previously, any business that was owned 20 percent or more by an individual who had defaulted on his or her student loan payments was considered ineligible for PPP loan assistance. This rule clearly shut out a large group of individuals and businesses who arguably could use the governmental assistance.  

The Biden administration has changed this rule, effective March 1, 2021. A default or delinquency on student loan payments will not automatically disqualify a PPP loan applicant. This change comes along with several others, including priority access for businesses employing 20 or fewer individuals.  

Over the past several years, student loan debt has surpassed credit card and auto debt with over 42 million Americans carrying some amount of student loan debt. Of this number, approximately one-third of them are in either delinquency or default on these loans.  

According to a report by the Center for Responsible Lending, a large number of these borrowers are self-employed. Approximately 800,000 self-employed Americans are reportedly behind on their student loan payments. Additionally, 500,000 minorities have also be excluded from PPP assistance due to the status of their student loans.   Student loan reform advocates have praised this change, saying that small business owners have been bearing the brunt of the financial struggles suffered during the COVID pandemic.

Please click here to read more.  

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 www.miamibankruptcy.com. 

Debt Relief, student loan debt, Student Loans

White House Considering Executive Action to Cancel Portion of Nation’s Federal Student Loan Debt

The Biden administration is considering issuing an executive order that would effectively cancel some portion of the $1.6 trillion in federal student loan debt held by 43 million Americans. This statement comes as no surprise as student loan forgiveness and student loan reform were consistently topics of discussion during the 2020 Presidential campaign.  

The statement came last Thursday from White House press secretary Jen Psaki. She indicated the administration was looking into whether President Biden had the executive authority to cancel a portion of the nation’s outstanding student loan debt. However, they also indicated that they would welcome any legislation brought forth by Congress to do the same.