How the debt ceiling bill will impact student loans
MADISON, Wis. (WMTV) - The House of Representatives passed the bipartisan Biden-McCarthy debt ceiling bill Wednesday night, sending the bill to the Senate, which will need to make a decision ahead of the Monday deadline. Part of the bill holds major implications for people with student loans.
“I’d say it’s probably something that cannot be shouted loudly enough from the rooftops,” said University of Wisconsin-Madison professor Nick Hillman. “It’s been a moving target for the past two and a half years.”
Student loan payments were put on hold near the pandemic’s beginning, with extensions happening repeatedly over the past two years. Part of the bill meant to avoid a default is a reinstatement of student loan payments, beginning 60 days after June 30th. As the bill moves from the House to the Senate, the Supreme Court still has yet to hand down a decision on loan forgiveness.
“There are about 44 million individuals in the US who have a federal loan that could potentially benefit from debt cancellation,” said Hillman.
Back on August 24th, President Joe Biden announced plans to forgive $10,000 in federal loans for people making under $125,000 annually and potentially up to $20,000 for people who received a Pell Grant. Months later, another payment pause extension was handed down, months before the debt forgiveness plan was challenged in court in February on the grounds of illegal use of executive authority. Now, students are stuck in a limbo of not knowing exactly what their bill is while the un-pausing of payments potentially sits around the corner.
“It’s definitely the most frustrating part, the not knowing,” said Ben Everson. “That is honestly the worst part because, you know, it’s, do I plan for it, how fast am I going to need to be repaying them? Is that $10,000 going to come through at some point?”
Everson graduated in December from UW with $15,000 in loans and says the unknowns mean right now, he does not know exactly what kind of car or apartment he can afford because of the unknowns around his loans. Hillman says many students have never even made loan payments and may not know where to go from here.
“I’m worried the most about the students who have never had to engage with the loan repayment system in the first place,” said Hillman.
Hillman suggests going finding out who your loans are through and getting their correct contact information, along with setting up a payment plan. He says being prepared is essential as penalties for avoiding payment are severe and include dings on your credit history and even garnishing of wages.
The government’s student aid website has a full list of loan servicers to consult.
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