What You Need To Know About Biden’s Changes To Student Loans

Author · Modified on 5 May, 2022

Federal Student Loans Have Been Increasingly Popular In Recent Years


Federal student loans are a form of financial assistance to help college students pay for costs associated with higher education. The first US Government backed student loans were offered in 1958 under the National Defense Education Act. 

The uptake in student loans has boomed in recent years, with the US Department of Education’s office of Student Aid providing over $120 billion per annum to college students through federal student loans. 

Federal student loans are divided into two forms – subsidized and unsubsidized. Subsidized loans are means tested, and see the US Department of Education paying the accrued interest on it until six months after students graduate, making subsidized loans cheaper for borrowers. Meanwhile, applicants don’t need to demonstrate any financial necessity to obtain an unsubsidized loan. 

Like any debt, a student loan needs to be paid back. However, repayment arrangements have been altered by President Biden throughout the Coronavirus pandemic. 


What Has Biden Changed?


Typically, student loans are accompanied by interest which makes repayments more expensive for borrowers. In 2019, this interest rate was a significant 4.53% for undergraduate subsidized loans, and 6.08% for unsubsidized graduate loans. When Biden became president, in the thick of the Coronavirus pandemic, he announced that as of March 2020:

  • Payments would be suspended, 
  • Loans wouldn’t bear interest, 
  • And collections on defaulters would be halted. 

While this regulation was initially introduced as a temporary measure through the Cares Act, Biden has continued to extend these mitigating measures, providing relief  to over 40 million student loan beneficiaries.

These measures were scheduled to end at the end of January 2022, but Biden has once again pushed this deadline back to May 2022. This decision was announced on December 22nd 2021. This respite is a continuation of mitigation measures introduced by emeritus President Trump who, like Biden, implemented student loan relief on two occasions. 


biden student loans
The Biden Administration is going to great lengths to help student borrowers.


What if I Can’t Pay My Loan Back When Repayments Resume?


While the current measures are a marked break from worrying about repayments, these measures won’t negate your debts forever. Given this, it’s vital that you plan ahead and make sure that you factor in repayments when financial planning. 

You will be required to repay your loan as long as you are employed. If this is the case, then you should take into account how much you are earning, and how much of your income will go towards your student debt, alongside any other debts you may have. With this in mind, you should plan your other spending carefully.

If you are unemployed, then you may be eligible for a deferment of up to three years. However, if you simply are struggling to make ends meet due to high costs of living or other reasons, you may consider applying for a loan to help you stay afloat and handle your debts. 


Biden Wants Borrowers to Understand and Look into Loan Forgiveness 


The Biden Administration is going to great lengths to help borrowers. Forgiveness – otherwise known as cancellation or discharge – means that some or all of your loan is waived, and you no longer need to repay what you borrowed. This may apply to you due to a disability or based on where you work. For instance, if you are employed by a government or non-profit organization, you may be eligible for forgiveness. Similarly,  if you teach full-time in certain schools, your loan could be reduced by up to $17,500. 

Biden is allowing borrowers to submit a waiver to count past payments that previously didn’t qualify, and this will continue until the end of October 2022. This makes forgiveness more accessible and widespread, providing even further respite. 

Was this helpful?

Thanks for your feedback!
Scroll to Top