President Joe Biden could extend the pause in student loan payments past May and is still considering widespread student debt forgiveness for federal borrowers, a top White House official said this week.
The Biden administration has remained largely quiet on the topic of student loan relief since it last extended the student loan payment pause to May 1, primarily due to the rapid spread of the Omicron COVID-19 variant and rising inflation. Biden made no mention of student loan forgiveness in his State of the Union address Tuesday, inspiring new concerns from advocates and borrowers that he’s walking back on one of his key campaign promises.
But White House Chief of Staff Ronald Klain suggested otherwise during an interview with Pod Save America on Thursday.
“The president is going to look at what we should do on student debt before the pause expires, or he’ll extend the pause,” Klain said during the podcast. “Whether or not there is some executive action [on] student debt forgiveness when the payments resume is a decision we’re going to take before the payments resume.”
What Does This Mean For Borrowers?
Though Klain’s comments suggest potentially significant developments for student loan borrowers, you shouldn’t change how you’re approaching your student loan debt at this time.
Instead, stay the course. If you’ve been taking advantage of this pause to prioritize other aspects of your finances, keep doing that. Overall, experts recommend using these extra months to help divert some money toward building an emergency fund or pay down more pressing high-interest debt, such as credit cards or private student loans. If you feel that you’re in a good spot financially and you want to get ahead of your student loan debt, Robert Farrington, founder and CEO of The College Investor, recommends setting money aside in a savings account and making a lump-sum payment right before payments start up again.
Regardless, now is a good time to start planning for when payments ultimately do resume. For example, make sure your personal information on your accounts are updated — such as your address, phone number, and email address — so you can stay on top of any new information about your loans. Review your repayment strategy to see if it still makes sense for your current financial situation. You should also know what you owe, and double check the pay-off dates and grace periods for each loan. Lastly, start putting together a future budget now for when payments resume. Take into account any changes to your income and see if you need to cut spending in certain areas to make room for upcoming student loan payments in your budget.
As of right now, federal student loan payments will resume at the start of May, and experts say you shouldn’t set your strategy based on the perceived likelihood that more student loan relief is coming. But it is something to keep an eye out for over the next few weeks.