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Student Loan Forgiveness Isn’t Happening. Here’s How to Prepare as Payments Resume

A photo to accompany a story about student loan forgiveness Melina Mara-Pool/Getty Images
President Joe Biden has supported canceling some portion of student debt since he took office. But we talked to six experts recently who say it’s unlikely to happen at this point. With federal student loan payments scheduled to resume after Jan. 31, 2022, it’s time for borrowers to make a plan if they don’t have one already.
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UPDATE: President Joe Biden announced Wednesday, Dec. 22, that he would extend the current student loan repayment freeze an additional 90 days through May 1, 2022. In a release posted by the White House, Biden cited ongoing pandemic-related challenges faced by student loan borrowers as reasoning for the new extension.

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It’s time to forget about student loan forgiveness, according to six experts we spoke to recently. 

Throughout the COVID-19 pandemic, federal student loan borrowers have hoped the government might eventually forgive a portion of their debt. Some Democrats in Congress have pushed for up to $50,000 forgiveness per borrower, while most Republicans have fervently opposed it. President Joe Biden has repeatedly said he supports the idea of canceling $10,000 per borrower. 

But now? It’s nothing more than a “pipe dream,” says Andrew Crowell, vice chairman of wealth management at financial services firm D.A. Davidson & Co., which recently conducted research on student loans and borrowers.

Asked Tuesday whether the Biden administration might yet extend the payment pause amid growing concern over the Omicron COVID-19 variant, White House Press Secretary Jen Psaki said simply: “The president has not made a decision yet.” The comment was somewhat of a change in tone after Psaki said on Dec. 10 the administration was planning for the current payment freeze to expire on Feb. 1.

The Biden administration has approved over $11.5 billion of student loan relief for nearly 600,000 borrowers since he took office — a notable but small percentage of the $1.6 trillion worth of student loans that Americans still collectively owe. 

We’re almost to the end of 2021, and there is no legislative or executive plan to broadly forgive federal student loan debt. The most recent update was at the end of October from Education Secretary Miguel Cardona, who said the Biden administration continues to examine broad-based loan forgiveness. 

Federal student loan payments will resume in less than two months, and experts say you shouldn’t set your strategy based on the perceived likelihood that student loan forgiveness is coming. Even before Psaki’s recent comments, the latest extension of the forbearance period had been referred to as the “final” one in a statement from the U.S. Department of Education.

Here’s what we know so far about wide-scale student loan forgiveness — and what you can do right now to take control of your student debt.

Why Experts Say Mass Student Loan Debt Cancellation Probably Won’t Happen

We talked to at least a dozen experts throughout the year to better understand the student loan landscape and over the summer even asked some of them to share their student loan forgiveness predictions.

There haven’t been any new developments on the subject from Congress or the White House since, so we decided to touch base with many of the same experts — and new ones — to see if they’ve changed their predictions on broad-based loan forgiveness.

All the experts we spoke to agreed on one thing: don’t count on it happening.

Dr. Tisa Canady

Point of view: Author of “Borrowing While Black” and Founder of Silver Canady & Associates

Why: Canady, founder and managing director of an educational research and consulting firm, says there’s “little hope” for student loan forgiveness for all borrowers because Congress continues to remain so divided about whether student loans should be forgiven, and if so, by how much. 

“I don’t think total student debt cancellation is going to happen,” says Canady. “It’s something that seems to be such a polarizing issue. I could be wrong, but I just don’t see Congress coming together on this.”

With the prospects of widespread student loan forgiveness looking increasingly bleak, Canady says the effects of lingering this debt weigh even heavier on Black women, who “traditionally face a larger wage gap and tend to borrow more for undergrad and pursue advanced degrees.”

Robert Farrington

Point of view: Founder and CEO of The College Investor, a student loan news site

Why: When we spoke with Farrington a few months ago, he said there would more likely be reform to the existing federal loan programs, like income-driven repayment plans and the Public Service Loan Forgiveness program, not a blanket policy that forgives a portion of all borrowers’ student loans. He says he still feels strongly this is the more likely outcome. 

“I think we’ve seen a little bit of that. Not much with Congress, but we definitely see the current administration working to fix the existing programs,” says Farrington. “I think it’s just becoming clearer that borrowers should not expect any type of blanket student loan forgiveness.”

Leslie Tayne

Point of view: Founder and Managing Director of the Tayne Law Group

Why: Like many other experts, Tayne, an attorney specializing in debt relief, doesn’t think there will be student loan forgiveness for all borrowers. Tayne — who took on a lot of debt to go to law school and has five kids in college — says more significant structural issues in the higher education system need to be addressed first. 

“My opinion is still the same: there will not be widespread student loan forgiveness,” says Tayne. “But the wheels are in motion to change in how student loans and educational expenses are structured.”

Tayne predicted in April that if Biden or Congress were to pass a proposal on student loan forgiveness, it would more likely be targeted toward specific groups. That prediction came to fruition when the Biden administration wiped out the federal student loan debt of borrowers who were defrauded by their college and disabled student loan borrowers through executive action.

Adam Minsky

Point of view: Principal and Owner of Law Office of Adam Minsky

Why: Minsky, a lawyer specializing in student loans, maintains a similar stance to earlier this year, saying there will be a combination of solutions to address mounting student debt, with a particular focus on revamping and fixing a number of existing federal loan programs. Take the Public Service Loan Forgiveness program, for example, which is undergoing a temporary overhaul that could potentially allow more borrowers to get their loans forgiven.

“I think so far that prediction has been fairly spot on,” he says. “The administration has used some executive action to streamline, improve, or expand existing federal loan programs.”

As for broad student loan cancellation? It’s likely not in the cards, says Minsky. “We haven’t heard anything about that potentially happening, and I don’t foresee everyone getting their loans wiped out.”

Andrew Pentis

Point of view: Certified Student Loan Counselor at Student Loan Hero, a student loan resource site

Why: Pentis predicted earlier this year that some dose of forgiveness, such as a $10,000 loan cancellation policy, could happen for all borrowers by the end of 2021. But he no longer thinks that’ll be the case. 

“It seems that the [Biden] administration is focused on providing student loan relief — just maybe not in the way that people initially assumed,” he says. “It has offered forgiveness to students who were wronged by their schools, students with disabilities, and students that are veterans.”

Pentis is now pessimistic that wide-scale forgiveness will come to fruition because the Biden administration is offering targeted loan forgiveness to “circumvent the more complicated conversation around mass forgiveness,” he says.

Andrew Crowell

Point of view: Vice Chairman of Wealth Management at D.A. Davidson & Co

Why: Crowell’s company D.A. Davidson & Co recently surveyed student loan borrowers to better understand their sentiment on student loan forbearance and wide-scale forgiveness. It found more than half of all respondents favored the government providing wide-scale student loan forgiveness. Still, only 43% believe it will happen during the Biden administration. 

The finding lines up with Crowell’s take on the subject; he says widespread student loan cancellation is a “pipe dream” at this point.

“I just don’t think there’s going to be any consensus on Capitol Hill and there’s questions of whether the president even has the political authority to do it on his own,” he says. “I think that divergence in opinions about how and how much is just too big at this point.”

What to Do If You Have Private Student Loans

Even if there was new legislation or executive action that grants mass student loan cancellation, it would only apply to federal student loans — not private student loans. Private student loan borrowers haven’t received much government relief throughout the COVID-19 pandemic, but there are still ways to make private student loans more manageable. 

If you have private student loans, you can get ahead of any financial challenges by starting a dialogue with your lender and discussing your options to refinance or modify your loans. With rates at historic lows, now is a great time to refinance student loans and get an interest rate significantly lower than your current rate. Shop around and compare rates from several lenders to ensure you’re getting the lowest rate possible.

5 Ways to Prepare for Student Loan Repayment in 2022

The repayment break for student loan borrowers ends next month. Experts recommend spending some time over this holiday season to figure out your loans, get your information updated, and make sure you’re on the right repayment plan. With student loan forgiveness an increasingly unlikely outcome, here’s how you can prepare to restart payments on your student loans in early 2022. 

1. Update Your Account Information

A lot has changed over the last two years. You might’ve moved to a new address, switched phone numbers, or maybe you have a new email address. 

That’s why it’s essential to make sure your information is up to date on your student loan accounts, such as your address, phone number, and email address. Experts say that’s critical because it’s the only way you’ll be able to stay on top of any new information about your loans and the forbearance period from your loan servicer. If your loan servicer has changed since you last made a payment, or you simply forgot, visit your account dashboard at studentaid.gov.

“You want to do everything possible to make sure that the information is properly updated so that you stay in communication,” says Tayne.

2. Rethink Your Repayment Strategy

Review your current repayment and ask yourself if it still makes sense for your financial situation. If not, start researching the right repayment plan for you or reach out to your loan servicer for help and get on it as soon as possible because loan servicers will likely be overwhelmed next year. “I think there will be a lot of chaos when payments resume,” says Farrington.

Some repayment plans can significantly reduce or eliminate your monthly payments, so check with your loan servicer for what repayment plans you qualify for. 

3. Review Your Loan Terms and Details

Know what you owe, and double check the pay-off dates and grace periods for each loan. 

Do this by creating a master list of your student loans, including the servicers, outstanding balances, minimum monthly payments, and interest rates. Having a place you can go to with all your information right in front of you will help you stay organized and make it easier to figure out who to contact for help or advice.

“Success in getting back into repayment really depends on student loan borrowers having a clear view of how much they owe,” says Canady.

4. Make a Budget

If you’re part of the majority of borrowers, you likely haven’t made student loan payments in almost two years — and that’s OK. As we get closer to the end of the forbearance period, you’ll want to make sure you know how much your next payment will be and when it is due, so it doesn’t take you by surprise. 

If you had automatic payments set up prior to the pause, you’ll need to set it up again, says Farrington. “It’s been two years, so the Department of Education doesn’t want to debit peoples’ bank accounts automatically.”

It’s also beneficial to start putting together a 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. Between now and Jan. 31, 2022, focus on areas where you can make your money go further, such as paying down high-interest debt, building your emergency fund, and contributing to your retirement plan.

5. Have a Back-Up Plan If You Can’t Afford Payments

If you don’t think you’ll be able to afford your payments once repayment starts, reach out to your lender and ask about potential options to avoid missed payments or default

One thing you can do to possibly lower your monthly payment is apply for income-driven repayment. An income-driven repayment plan is a monthly payment based on your family size and a percentage of discretionary income. If you earn less than 150% of the federal poverty line, your payments could be as low as $0. 

“Don’t scramble at the last minute and try to figure this out, even if your budget changes year to year,” says Tayne. “Don’t assume that you’ve slipped through the cracks if you haven’t received anything because it’s unlikely.”

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