Student debt is a costly burden for millions of Americans who will be expected to resume federal loan payments in May. Over the past few months, a growing number of Democrats have called on President Joe Biden to fulfill his campaign promise of canceling student loans before forbearance expires.
The latest is John B. King, Jr., who served as the Secretary of Education under former President Barack Obama and is currently running for governor of Maryland. King urged Biden to "use his executive authority to unilaterally cancel student debt for each borrower" in a recent editorial.
"All too often, the crushing weight of student debt prevents people from even considering buying a home, beginning a family, or starting a new business," King wrote. "This is indisputably a crisis."
Despite calls from prominent lawmakers, the Biden administration has not yet announced plans to deliver student loan forgiveness via executive action. The White House recently suggested that the president is counting on Congress to make progress on canceling student debt. And notably, the president didn't mention student debt cancellation during his first State of the Union address on March 1.
Keep reading to learn more about the likelihood of student debt cancellation, and consider your alternative options like income-driven repayment (IDR) and student loan refinancing. You can compare student loan refinance rates on Credible for free without impacting your credit score.
King: ‘Bold actions’ needed to resolve student debt crisis
While student loan debt relief is "a realistic solution that can transform millions of lives," King said, it's just one proposal that should be met with "even more bold actions" to address the student debt crisis going forward.
King advocates for debt-free public college for low- and middle-income students, as well as "truly affordable college for all." That includes tuition-free community college, which has been proposed by the Biden administration.
However, more than a year into his presidency, Biden has faced difficulty in implementing policies that would make higher education more affordable.
Free community college wasn't included in the Build Back Better Act, which failed to get enough support in the Senate. And although the Department of Education has approved $16 billion worth of student loan discharges since Biden took office, widespread debt forgiveness has not yet been achieved.
Expiration of student loan forbearance looms over borrowers
The Education Department has extended the federal student loan payment pause three times under Biden, but this relief is expiring soon.
"While delaying the restart of federal student loan payments until May 1 provided important temporary relief, a dark cloud still hangs over millions of borrowers," King said.
The Biden administration has not announced plans to provide additional student loan relief, whether by canceling student debt or extending forbearance again. Without student loan cancellation from lawmakers, millions of student loan borrowers will need to get ready to resume monthly payments.
One strategy is to consolidate into to a private student loan with better terms. Refinancing to a lower rate may help you reduce your monthly payments and save money over time. But it's important to note that refinancing your federal student loan debt will make you ineligible for government protections, like IDR plans and select student loan forgiveness programs. You can learn more about student loan refinancing on Credible.
How student loan borrowers can prepare for payments in May
The vast majority (93%) of student loan borrowers said they aren't financially prepared to resume making payments in May, according to a recent survey conducted by the Student Debt Crisis Center. If you're not ready for the end of forbearance, consider these strategies:
- Enroll in an income-driven repayment plan to limit your federal student loan payments to between 10% and 20% of your disposable income, depending on the type of loans you have.
- Defer your federal student loans for up to 36 additional months. Keep in mind that interest may accrue on your loans during deferment, which adds to the overall cost of borrowing.
- Reduce your monthly payments by refinancing to a private loan with a lower interest rate. You can use Credible's student loan refinance calculator to estimate your new monthly payments.
While student loan refinancing may help you lock in a lower interest rate on your student debt, it's not right for everyone. For example, federal student loan borrowers who want to apply for the Public Service Loan Forgiveness program (PSLF) shouldn't refinance to a private loan.
If you don't plan on utilizing federal benefits, or if you already have private student loan debt, then refinancing may be an option to consider. You can browse current refinance rates from private student loan lenders in the table below. Then, you can visit Credible to compare offers tailored to you with a soft credit inquiry.
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