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Senator Sheldon Whitehouse introduced a new bill that would allow federal student loan borrowers to refinance at 0%. (iStock)
Sheldon White House Senator, DR.I. submitted a new bill If passed, Americans will be able to refinance their federal student loans at 0% interest.
The White House introduced the Zero Percent Student Loan Refinancing Act. This allows borrowers to pay off student loans without adding interest to the loan. Similarly, Connecticut Democrat Rep. Joe Courtney introduced the bill in the House.
“Heavy interest payments on student loans could create a debt treadmill that many Americans cannot escape,” Whitehouse said in a June 2 press release. These interest payments often come between the borrower and the financial freedom to focus on the future, such as investing in their children. It helps me run a business. I live in it.”
Student loan debt has skyrocketed in recent years, reaching nearly $1.75 trillion in federal and private student loan debt as of June. St. Louis Federal Reserve BankAbout 48 million Americans, or one in eight, have some amount of student debt, according to Whitehouse.
The bill will affect people with federal student loans, but private student loan borrowers can also get lower interest rates through refinancing. Visit Credible to see personalized interest rates without affecting your credit score.
Biden administration cancels $5.8 billion in student loan debt
Some borrowers struggle to pay off their debts
Federal student loans are now on COVID-related forgiveness and payments Paused Until August 31st. During this time, the borrower does not have to make federal student loan payments and the interest rate he has is set at 0%. The Department of Education also stopped collecting defaulted loans during this time.
But other than this suspension of payments, some types of federal student loans accrue interest even during grace periods at school, hardship forgiveness, and other non-payment periods. And some borrowers with income-driven repayment plans may even have monthly payments too low to cover their monthly interest.
In fact, 2021 joint report A study by the National Consumer Law Center and Center for Responsible Lending found that 63% of student loan borrowers who made payments during the aforementioned payment suspension ended up with more debt than they originally borrowed. I was.
But the White House said the new bill would abolish those interest rates and allow borrowers to pay the full amount on their principal balance. This allows a student loan borrower to refinance his federal loan to 0% for all his eligible FFEL, Direct, Perkins, and Public Health Services Act loans. The bill will allow refinancing until December 31, 2024. It also automatically refinances student loan debt for direct loan holders.
The measure won’t cut private student loan rates to 0%, but they can do so through refinancing. Visit Credible to compare multiple lenders at once And choose the one with the best interest rate for you.
Biden says he’s considering canceling some student debt, but not $50,000
Biden Considers Student Loan Forgiveness
President Joe Biden has said he is considering canceling some of his student loan debt, but has yet to make a formal decision on when or how much. Democrats said they would not cancel $50,000 in student loan debt. asked for.
Biden told reporters at the White House in May that he was “considering working on debt relief.” We are in the process of doing so and will have an answer in the coming weeks.”
While the administration has yet to announce a decision on student loan debt forgiveness, former White House press secretary Jen Saki said Biden “will make a decision on student loan forgiveness before the student loan suspension is completed.” will bring down,” he said.
Since taking office, the president has forgiven $25 billion in student loans to borrowers who are eligible for certain programs, such as civil servant loan forgiveness and immunity related to borrower defense and school closures. Ministry of Education.
Student loan forgiveness only applies to federal student loan borrowers, but if you have a private student loan, you can pay less through refinancing. To check if this is a good option, Contact Credible to speak with a student loan expert Have all the questions answered.
Have a financial question and don’t know who to ask? Email a Credible Money Expert moneyexpert@credible.com Your question may be answered by Credible in the Money Experts column.
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