GRAND RAPIDS, Mich. — Since COVID-19 broke out in March 2020, federal student loan repayments have been on hiatus. The deadlines were extended many times. Most recently, in early 2022, President Joe Biden pushed it to August.
Some student loan and financial experts said they don’t know what the president will decide next.
“Word around the campfire is that sometime by the end of July or early August there’ll be some sort of statement,” said Micheal Kitchen during a Zoom interview with FOX 17 on Wednesday. “It’s thought that either there will be some sort of forgiveness announcement, maybe the $10,000 amount, which has been talked about or [repayments] will be pushed ’til later in the year probably toward the end of the year.”
Kitchen is the senior managing editor at The Lending Tree’s Student Loan Hero. He said there’s been some pressure from the Democrats to push repayments past the November election so it doesn’t become a distraction.
“The $10,000, I mean this was something Joe Biden talked about as a candidate. There is a lot of support for it,” he said. “But, it’s not a bipartisan policy.”
Kitchen said there are already members of the Republican Party in Congress who want to pass legislation that’ll halt student loan forgiveness. But, if passed it’ll have a major impact in Michigan.
“According to a study we did, about 30% of people in Michigan — student loan borrowers in Michigan — would see all of their students loans wiped out,” he said.
Currently in Michigan, according toThe Institute for College Access and Success (or TICAS), the average debt of graduates in 2019-2020 was $29,863. Of the public colleges, Western Michigan University had the highest average with $34,858, and of private schools, it was Alma College with $43,187.
The report showed that at least 73% of the students at both WMU and Alma graduated with those averages.
“There’s been a lot of debate that there’s going to be an executive order and what that executive order is going to say,” said Mary Jo Terry during a Zoom interview with FOX 17 on Wednesday. “You usually owe between $30,000-$35,000. So, even with $10,000 forgiven you’re still going to have a substantial amount of student loan debt that’s still outstanding.”
Mary Jo Terry is the managing partner at Yrefy LLC. She said no matter what happens it’s best that borrowers check their studentaid.gov account now.
“You have to log in. Over the last two and half years there have been changes to your loans services,” she said. “So for instance, Navient has dropped out and some others have come in. So, find out who services your loans.”
Terry said it’ll help determine what your monthly payments will be.
Next, she said, enroll in auto-debit. That decision alone means borrowers get a quarter percentage discount. With inflation sky-high right now, it’s money that can go to other necessities.
“The third thing that you should do is you need to know that right now during the stay, which is due to the CARES Act, there is no interest accruing on your loan,” Terry said. “So, if you decided to make payments right now, every dollar comes off of your principal balance. So, that means you could be cutting months up to years off of your loans.”
Terry also recommended looking into the Income Driven Repayment Plan, which’ll make monthly payments affordable.
She added that people should try to get their loans in good standing so that they qualify for loan forgiveness, should it be offered.
“If you have private student loans, in that case, take a look at the interest rate, you might be able to refinance. And, if you want to refinance, do it really quickly,” Kitchen said. “Rates are going up now. In the past, it was kind of better to take your time a little bit when we were like in an easing monetary environment. But now you kind of want to act on that if you think you can score a better interest rate.”
He said that refinancing will depend on your credit rating or if you can co-sign with someone who has good credit.
Nevertheless, both said they don’t know what Biden will decide but they’ll be watching.
“The thing is we have done surveys that even if it doesn’t wipe out all of your debt it’s still a big deal. It’ll have an impact on how much interest you end up paying,” Kitchen said about the loan forgiveness. “It’ll take years off your repayment if you just pull $10,000 off of that.”
