INDIANAPOLIS — President Biden is expected to make a decision about federal student loan forgiveness and the Federal Student Loan Moratorium Wednesday.
This comes one week before the Aug. 31 deadline provided by his spokesperson.
Federal student loan payments have been paused since March 2020. Now, they're set to resume Sept. 1 – unless the date is pushed again.
Cecilia Clark with Nerdwallet said that means making sure your budget is ready to start seeing those hits again.
"Borrowers need to be prepared to make payments starting next month," she said.
If you can't afford your payments, Clark said to contact your loan servicer once the decision is announced.
"You may qualify for lower payments through income-driven repayment. Your payments could be as low as $0," Clark said.
As for the announcement on possible widespread federal student loan forgiveness, there aren't many details. Clark said at this point, it's all hearsay and there are no concrete plans.
"Nothing has been released officially, but what we've heard, is that it'll be $10,000 and that there will be income caps on that $10,000 forgiveness," she said.
Even if a forgiveness plan is announced, there are possible roadblocks.
"The great debate with, you know, people saying, 'You cannot do this, absolutely not!' and other people saying, 'Actually you can,' and ultimately, we're not sure at this time," Clark said.
While we wait on the announcement, Clark suggests looking into existing loan forgiveness plans. Those include Public Service Loan Forgiveness (PSLF) and Borrower Defense Loan Discharge.
Right now, there is a limited PSLF waiver in place through Oct. 6 that is a short-term opportunity for expanded loan forgiveness. Qualifications can be found here.
Borrower Defense Loan Discharge is for borrowers who feel their school misled them or engaged in misconduct in violation of certain laws.
NOTE: The video below is from a March 2022 report: