Navigating the Future of Student Loans: Key Questions and Answers

Updated on January 6, 2023

Are you a student loan borrower wondering about the future of repayment policies and debt forgiveness options? Stay informed with our comprehensive guide to the key questions and answers about the future of student loans. From the status of the one-time debt forgiveness plan to the impact of the new administration on student loan policies, we’ve got you covered. Learn what you can do to prepare for the future of student loans and navigate the uncertainty.

Summary

Student loan borrowers are facing uncertainty in 2022 with changes announced to repayment policies and a comprehensive one-time debt forgiveness plan
It is unclear whether the one-time debt forgiveness plan will be implemented
It is important to stay informed about any updates or changes to repayment options such as income-driven repayment plans and loan forgiveness programs
The new administration may make further changes to student loan policies, and it is important to stay up to date on any developments and how they may affect you
As the rollout of President Biden’s plan to cancel student debt has been paused due to lawsuits, it is unclear if the program will still go through
The forbearance period, which has allowed students to pause their loan payments since March 2020, may come to an end in August, but it is advisable for borrowers to prepare for repayment to begin sooner
The new income-driven repayment plan announced by the White House in August has yet to be implemented and it is currently unclear when borrowers will be able to sign up for the program
It is important for borrowers to communicate with their lender or servicer, keep track of their payments, and seek financial advice or assistance if necessary.

Key Questions About the Future of Student Loans

As a borrower, it can be difficult to navigate this uncertainty and plan for your financial future. Here are some of the biggest questions currently facing the student loan industry, and what you can do to prepare:

Will the one-time debt forgiveness plan be implemented? This plan, which would offer borrowers the opportunity to have their student loan debt forgiven in one lump sum, has received a lot of attention. However, it is still unclear whether it will be put into action.
How will repayment policies change? Many borrowers are wondering what the future holds for repayment options, such as income-driven repayment plans and loan forgiveness programs. It is important to stay informed about any updates or changes to these programs.
What impact will the new administration have on student loans? With a new president and new members of Congress, there is the possibility for further changes to be made to student loan policies. It is important to stay up to date on any developments and how they may affect you.

As you navigate the uncertainty surrounding student loans, it is important to stay informed and to communicate with your lender or servicer. Make sure to keep track of your payments and reach out if you are having difficulty making them. Additionally, consider seeking financial advice or assistance if you need help managing your student loan debt.

Is Student Debt Cancellation Still Happening?

As the rollout of President Biden’s plan to cancel student debt has been paused due to lawsuits, borrowers are left wondering if the program will still go through. The plan, which would cancel $10,000 in student loan debt for eligible borrowers and $20,000 for qualifying Pell Grant recipients, has already been approved for 16 million borrowers. However, they will not see any debt forgiven unless the White House is successful in court.

In the meantime, it is advisable for borrowers to set aside money as if they are repaying their full student loan debt and to avoid taking on unnecessary expenses, according to Scott Buchanan, executive director of the Student Loan Servicing Alliance. He advises borrowers to “If the loan forgiveness comes, then great, you have a windfall in some respects and extra money that now you can put towards other expenses.” It is important for borrowers to stay informed about the status of the program and to plan accordingly.

When Will Forbearance End?

It is unclear when the forbearance period, which has allowed students to pause their loan payments since March 2020, will come to an end. The current plan is for repayment to resume 60 days after the legal challenges to President Biden’s debt cancellation plan have been resolved, or 60 days after June 30, 2023, whichever occurs first. This means that the forbearance period could potentially last until August, but it is advisable for borrowers to prepare for repayment to begin sooner. The Supreme Court will hear arguments in February on the cases blocking the implementation of the debt cancellation plan, with a decision expected to follow.

When Can I Sign Up for the New Income-Driven Repayment Plan?

The new income-driven repayment (IDR) plan announced by the White House in August has yet to be implemented, and it is currently unclear when borrowers will be able to sign up for the program. The new IDR plan is expected to cap monthly payments for undergraduate loans at “5% of a borrower’s discretionary income,” which is half the rate of existing IDR plans. However, it is not known exactly how the new IDR plan will be structured, who will be eligible to apply, and when applications will open. The draft rules for the new IDR plan have yet to be released, and it is uncertain when they will be made available. However, once the draft rules are released, it will provide a better understanding of what the new IDR plan may look like.

MORE: Revised Income-Driven Repayment Plan for Undergraduates: The Most Generous Plan Yet

Can I Discharge Student Loans in Bankruptcy Now?

Previously, individuals in bankruptcy could request that their student loan debt be discharged, but it was difficult to do so compared to discharging other types of consumer debt. This was because borrowers had to demonstrate to a judge that repaying their student debt would cause undue hardship. However, in November, the Departments of Justice and Education introduced new guidelines to standardize the definition of “undue hardship,” which will be used to determine whether student loan debt can be discharged in bankruptcy cases. While borrowers can file bankruptcy cases under the new guidelines now, it may be beneficial for those who have been in repayment for at least 20 years to wait until the new income-driven repayment (IDR) waiver is applied to their accounts in July before taking any action. This IDR waiver, which was announced in April 2022, will count every month spent in repayment or on pause towards forgiveness, potentially making it easier for some borrowers to have their loans discharged.

What’s Happening with the Joint Consolidation Loan Separation Act?

The Joint Consolidation Loan Separation Act, signed into law by President Biden in October, allows borrowers who consolidated their student loans with a spouse between 1993 and 2006 to separate their debt and access federal student loan forgiveness programs. This law will offer “freedom from financial and domestic abuse, freedom to control their own financial future, and freedom to enjoy the same benefits as other borrowers across the country,” according to Sen. Mark Warner, who sponsored the bill. The Education Department holds at least 13,000 joint consolidation loans, but it is currently unclear when the law will be fully implemented or what the application process will entail.

Conclusion

In conclusion, there is currently a lot of uncertainty surrounding student loan policies in 2022, with changes announced to repayment options and a comprehensive one-time debt forgiveness plan. It is important for borrowers to stay informed about any updates and changes, and to communicate with their lender or servicer to ensure they are prepared for any potential impacts on their financial situation. While it is unclear how these changes will ultimately be implemented, it is advisable for borrowers to continue making payments and to seek financial assistance if needed.

Questions Answered in this Article

Will the one-time debt forgiveness plan be implemented? Answer: It is still unclear whether it will be put into action.
How will repayment policies change? Answer: It is important to stay informed about any updates or changes to these programs.
What impact will the new administration have on student loans? Answer: There is the possibility for further changes to be made to student loan policies. It is important to stay up to date on any developments and how they may affect you.
Is student debt cancellation still happening? Answer: The plan has already been approved for 16 million borrowers, but they will not see any debt forgiven unless the White House is successful in court.
When will forbearance end? Answer: The forbearance period could potentially last until August, but it is advisable for borrowers to prepare for repayment to begin sooner. The Supreme Court will hear arguments in February on the cases blocking the implementation of the debt cancellation plan, with a decision expected to follow.