Student debt forgiveness pending, is repayment still possible?

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While the legal battle over President Joe Biden’s student loan debt cancellation program continues, there may be some relief. The U.S. Department of Education has stated that student loan borrowers who have paid their debt during the break on bills during the pandemic can be automatically repaid. Even if full forgiveness is on hold, repayments still have the potential to close the racial wealth gap.

The breakdown you need to know:

According to the government, more than 9 million people made at least one payment on their federal student debt between April 2020 and March 2022, so a refund could go a long way. Now a Trump-appointed judge, Mark Pittman of Texas, has struck down Biden’s broad student loan forgiveness program and issued a nationwide injunction blocking it nationwide.

This repayment process is automatic for borrowers who qualify for student loan forgiveness. CultureBanx reported that the approximately five million student loan borrowers who have held commercial Federal Family Education Loans (FFEL) were not eligible for the payment pause, nor for the repayment.

Applications for $10,000 in student loan forgiveness per borrower earning less than $125,000 are now closed due to the aforementioned nationwide injunction. Herein lies the problem, according to the Urban Institute, approximately 19% of households with a total income of less than $125,000 have student loan debt.‍ The Roosevelt Institute briefing shows that forgiving up to $50,000 in student debt per borrower immediately increase the borrower’s wealth. Black Americans at 40%.

Not to mention that four years after graduation, the average black borrower owes $53,000, while the average white borrower owes $28,000, according to the Brookings Institute, meaning they can’t focus on other financial goals like buying a house, paying off credit card debt. and save for your retirement. Eliminating this debt will narrow the racial wealth gap for young families, with 86.6% of black students taking federal loans to attend four-year colleges.

What’s next:

The vast majority of borrowers have failed to make payments, taking advantage of account suspension and interest accrual. The Biden administration has already announced that it will appeal Pittman’s ruling to the ultraconservative US Court of Appeals for the Fifth Circuit.

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