3 Reasons Why Biden Could Extend the Student Loan Payment Pause

Here are three reasons why President Joe Biden could extend the student loan payment pause. 

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Fixed APR ?APR, or Annual Percentage Rate, is the price you pay to borrow money. Fixed APR means that your interest rate will always stay the same. Even if interest rates change, your interest rate or monthly payment will not. Fixed APR includes a 0.25% discount when you enroll in autopay.

Variable APR ?APR, or Annual Percentage Rate, is the price you pay to borrow money. Variable APR means that your interest rate can fluctuate over time, which can increase or decrease your monthly student loan payment. Typically, a variable-rate loan has a lower introductory rate than a fixed-loan rate loan. Variable APR includes a 0.25% discount when you enroll in autopay.

APR

5.24% - 9.99%

6.24% - 9.99%

5.24% - 9.99%

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on SoFi's website

Overview

Variable APR:

6.24% - 9.99%

Fixed APR:

5.24% - 9.99%

Minimum Credit Score:

650

Minimum Income:

None

Fees:

None

Minimum Loan Amount:

$5,000 ($10,000 in CA)

Details

Eligible Loans:

Private & Federal

Eligible Degrees:

Undergraduate & Graduate

Loan Terms:

5, 7, 10, 15, 20 years

Borrower Residency:

All states

Hardship Deferment:

Yes

Co-signer Option:

Yes

Review:

SoFi Student Loan Refinancing Review

5.44% - 9.99%

6.24% - 9.99%

5.44% - 9.99%

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View Details

on Earnest's website

Overview

Variable APR:

6.24% - 9.99%

Fixed APR:

5.44% - 9.99%

Minimum Credit Score:

650

Minimum Income:

None

Fees:

None

Minimum Loan Amount:

$5,000

Details

Eligible Loans:

Private & Federal

Eligible Degrees:

Undergraduate & Graduate

Loan Terms:

5-20 years

Borrower Residency:

All States except NV

Hardship Deferment:

Yes

Co-signer Option:

No

Review:

Earnest Student Loan Refinancing Review

5.19% - 9.74%

5.84% - 9.75%

5.19% - 9.75%

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on NaviRefi's website

Overview

Variable APR:

5.84% - 9.75%

Fixed APR:

5.19% - 9.74%

Minimum Credit Score:

680

Minimum Income:

None

Fees:

None

Minimum Loan Amount:

$5,001 ($10,001 in CA)

Details

Eligible Loans:

Private & Federal

Eligible Degrees:

Undergraduate & Graduate

Loan Terms:

5-20 years

Borrower Residency:

All States except NV

Hardship Deferment:

Yes

Co-signer Option:

No

Review:

NaviRefi Student Loan Refinancing Review

5.48% - 8.69%

5.28% - 8.99%

5.28% - 8.99%

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on ELFI's website

Overview

Variable APR:

5.28% - 8.99%

Fixed APR:

5.48% - 8.69%

Minimum Credit Score:

680

Minimum Income:

$35,000

Fees:

None

Minimum Loan Amount:

$10,000

Details

Eligible Loans:

Private & Federal

Eligible Degrees:

Undergraduate & Graduate

Loan Terms:

5, 7, 10, 15, 20 years

Borrower Residency:

All States

Hardship Deferment:

Yes

Co-signer Option:

Yes

Review:

ELFI Student Loan Refinancing Review

3.99% - 9.99%

5.99% - 9.99%

3.99% - 9.99%

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View Details

on Splash's website

Overview

Variable APR:

5.99% - 9.99%

Fixed APR:

3.99% - 9.99%

Minimum Credit Score:

640

Minimum Income:

None

Fees:

None

Minimum Loan Amount:

$5,000

Details

Eligible Loans:

Private & Federal

Eligible Degrees:

Undergraduate & Graduate

Loan Terms:

5 – 20 years

Borrower Residency:

All states

Hardship Deferment:

Varies

Co-signer Option:

No

Review:

Splash Financial Student Loan Refinancing Review

6.99% - 10.99%

7.29% - 12.44%

6.99% - 12.44%

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View Details

on Citizens' website

Overview

Variable APR:

7.29% - 12.44%

Fixed APR:

6.99% - 10.99%

Minimum Credit Score:

Not disclosed

Minimum Income:

$24,000

Fees:

No prepayment or origination fees

Minimum Loan Amount:

$10,000

Details

Eligible Loans:

Private & Federal

Eligible Degrees:

Undergraduate & Graduate

Loan Terms:

5, 7, 10, 15, 20 years

Borrower Residency:

All states

Hardship Deferment:

Yes

Co-signer Option:

Yes

Review:

Citizens Student Loan Refinancing Review

5.44% - 9.75%

5.49% - 9.95%

5.44% - 9.95%

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on Laurel Road's website

Overview

Variable APR:

5.49% - 9.95%

Fixed APR:

5.44% - 9.75%

Minimum Credit Score:

660

Minimum Income:

None

Fees:

None

Minimum Loan Amount:

$5,000

Details

Eligible Loans:

Private & Federal

Eligible Degrees:

Undergraduate & Graduate

Loan Terms:

5, 7, 10, 15, 20 years

Borrower Residency:

All States

Hardship Deferment:

Yes

Co-signer Option:

Yes

Review:

Laurel Road Student Loan Refinancing Review

5.24% - 12.18%

5.55% - 12.18%

5.24% - 12.18%

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View Details

on LendKey's website

Overview

Variable APR:

5.55% - 12.18%

Fixed APR:

5.24% - 12.18%

Minimum Credit Score:

680

Minimum Income:

$24,000

Fees:

None

Minimum Loan Amount:

$5,000

Details

Eligible Loans:

Private & Federal

Eligible Degrees:

Undergraduate & Graduate

Loan Terms:

5, 7, 10, 15, 20 years

Borrower Residency:

All states, except ME, ND, NV, RI, WV

Hardship Deferment:

Yes

Co-signer Option:

Yes

Review:

LendKey Student Loan Refinancing Review

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Federal student loan payments have been paused since March 2020. That’s when Congress passed historic student loan relief that:

• paused federal student loan payments
• set interest rates to 0%
• stopped collection of student loans in default

Federal student loan payments are expected to restart on May 1, 2022. However, it’s possible that Biden may extend the student loan payment pause beyond May 1. While no decision has been made, White House Chief of Staff Ron Klain indicated that Biden will be making a decision soon.

Here are three reasons why Biden could extend student loan relief:

1. Student loan relief could provide a safety net for borrowers
2. Democrats could lose the midterm elections
3. Many student loan borrowers will have new student loan servicer

1. Student loan relief could provide safety net for borrowers

First, Biden could extend student loan relief beyond May 1, 2022 to provide a safety net for student loan borrowers. With no mandatory student loan payments, borrowers could pay off other debt, invest for retirement, or save to buy a home.

The U.S. Department of Education estimates that student loan borrowers collectively will save $5 billion every month there is student loan relief. Since March 2020, student loan borrowers have saved more than $120 billion of student loans. If Biden extends the student loan payment pause three months, for example, borrowers could save an additional $15 billion.

Sen. Elizabeth Warren (D-MA) has expressed concern about rushing to restart student loan payments when the Covid-19 pandemic hasn’t ended. A recent survey shows that 93% of student loan borrowers say they are ill-prepared to start repaying federal student loans. By extending the student loan payment pause, borrowers could have more time to make a smoother transition to restart payments.

(Learn more: Compare the latest rates to refinance student loans)

2. Democrats could lose the midterm elections

A second reason to extend student loan relief is to help Democrats win the midterm elections in November. If Biden doesn’t extend the student loan payment pause, it could hurt Democrats in the midterm elections. Rep. Alexandria Ocasio-Cortez (D-NY) has said that Democratic voters may not support Democrats without more student loan relief. This includes wide-scale student loan cancellation too.

However, Biden says he doesn’t have the legal authority to cancel student loans for all student loan borrowers. While Biden has cancelled more than $15 billion of student loans since becoming president, he has focused on targeted student loan cancellation. That said, Biden has called on Congress to cancel up to $10,000 of student loans for borrowers.

While progressives want an extension of student loans relief, Biden must weigh the political ramifications. For example, a fourth extension of student loan relief could alienate independents and moderates. If Democrats want to retain a majority in Congress, they will need both independents and moderates to vote for Democrats in November. Therefore, Biden must weigh the advantages and disadvantages of extending the student loan payment pause.

(Learn more: How to pay off student loans faster)

3. Many student loan borrowers will have a new student loan servicer

A third reason for Biden to extend the student loan payment pause is the transition of millions of borrowers to a new student loan servicer. Student loan servicers collect student loan payments from student loan borrowers and provide customer service. This year, many student loan borrowers will have a new student loan servicer due to a major shakeup with federal student loan servicers. Several leading student loan servicers, including Navient and FedLoan Servicing, announced they will no longer service federal student loans.

Therefore, nearly 16 million student loan borrowers will get a new federal student loan servicer this year. The U.S. Department of Education is responsible to ensure that there is a smooth transition as borrowers are transferred to new student loan servicers.

The Education Department has been contacting borrowers for months to alert them of the transition. However, Biden could give the Education Department and borrowers more time to change student loan servicers.

(Learn more: How to pay off $70,000 of student loans)

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