Every American is familiar with the term “student loan”. Whether you’re fresh out of school or just starting your journey, it’s safe to say that you have student loans of some kind. And while the Trump administration has announced plans to suspend certain parts of the Obama-era student loan regulations, there’s still some uncertainty surrounding the future of student loans. In this blog post, we will explore the possible implications of a student loan pause and what you can do to prepare for whatever comes next. We will also provide a guide on how to refinance your student loans if you are eligible. So whether you’re worried about the future of your loans or just want to be proactive about it, read on for everything you need to know.
What is the Student Loan Pause?
The Student Loan Pause has been a topic of discussion on social media and among the public for quite some time now. The Obama Administration first announced their plan to put a pause on new student loans in December of 2016. This pause was meant to help students consolidate their debt, lower their interest rates, and save money on their monthly payments.
Since President Trump took office, there has been much debate about whether or not the Student Loan Pause will be extended. On one side of the argument are those who feel that extending the Pause would be a good idea because it would give borrowers more time to get their finances in order and save money on their monthly payments. In contrast, others believe that extending the Pause would only serve as another way for the government to bailout struggling schools and colleges.
At this point it is still unclear if or when the Student Loan Pause will be extended. However, given the current political climate it is safe to say that this issue is far from resolved.
What are the Effects of the Student Loan Pause?
The Obama-era student loan interest rate freeze has come to an end and new rates will go into effect on July 1st. This increase could mean a big financial burden for students who are already struggling with hefty amounts of debt. The average student loan indebtedness was $37,172 in 2017 and is predicted to rise to $50,000 by 2025.
Some people have argued that the federal government should continue to provide relief for borrowers as they work to repay their loans. Others feel that it is unfair to ask students to shoulder the entire burden of this issue without providing any help from the government. President Trump has said that he would like to see a solution that extends the interest rate freeze for those who are current on their loans, but he has not yet come up with a plan.
There are a number of ways in which the student loan pause could be extended or eliminated altogether. One option is for Congress to pass a bill that extends the interest rate freeze for another year or two. Another possibility is for Trump to sign an executive order extending it indefinitely. If these options do not materialize, then borrowers may find themselves in even more difficult financial circumstances than they are currently in.
What Happens if the Student Loan Pause Is Not Extended?
If the federal government fails to extend the student loan pause, borrowers who borrowed during the years covered by the pause could see their payments increase by as much as 30%. Those borrowers with FFEL loans would see their interest rates go up from 3.4% to 7.9%, while those with Direct Loans would face an interest rate hike of up to 6.8%. For students who took out private loans, rates will also increase, though not as dramatically.
The Obama administration has stated that they are in talks with Congress over extending the student loan pause, but it remains to be seen if an agreement can be reached before it expires on May 27th. In the meantime, borrowers should keep an eye on their statements for any indication of how the extension decision may affect them.
What is the student loan pause and why is it important?
The student loan pause was announced on July 1, 2018 by the Trump administration. The pause will allow for a review of the government’s role in student loans and will potentially lower interest rates on federal loans. The intent of the pause is to give borrowers more options and help them understand their repayment options.
The student loan pause could have a significant impact on borrowers. If you are considering using federal student loans to finance your education, it is important to understand what this pause means for you.
If you are not currently in default or in forbearance, there is no change to your status as of July 1, 2018. However, if you are current on payments but have a total debt greater than $30,000 then your interest rate could go up by 0.25%. This change only applies to new loans taken out beginning on or after July 1, 2018. If you have an existing federal loan then your rate may stay the same or go down depending on your current credit score and other factors.
This pause does not affect private student loans or debt from prior degrees. Federal student loans make up the majority of students’ debt and this pause could have a big impact on their ability to pay back their debt.
If you are concerned about how thispause might affect you, it is important to speak with a lender or credit counselor who can help provide guidance about your specific situation.
What are the potential consequences of the student loan pause not being extended?
If the student loan pause is not extended, then more than 1.4 million borrowers will have their loans re-charged on October 1st. This could mean a higher interest rate and could also cause those borrowers who have not made any payments for over 270 days to have their loans discharged. Additionally, if you are in forbearance or deferment status, your loan may be discharged if you stop making payments. The consequences of the student loan pause not being extended can be significant for borrowers across the country.
What can be done to support continuation of the student loan pause?
There is no clear answer as to whether or not the student loan pause will be extended. However, there are several things that can be done in order to support continuation of the pause. First and foremost, students and their families should continue to keep up with their payments on time in order to maintain good credit ratings and avoid being penalized by lenders. Additionally, it is important for borrowers to communicate with their lender about any concerns or questions they may have about their repayment plan. Finally, it is important for policymakers to consider all of the implications of continuing the pause before making a final decision.
There has been a lot of talk lately about the possibility of a student loan pause being extended. Many people are worried that this could lead to more people defaulting on their loans, and in turn causing even more financial problems for those who are already struggling. It’s important to remember that not everyone will be affected by the pause – some borrowers may actually see their payments decrease as a result. So it’s worth doing your research before making any decisions about whether or not you should refinance your student loans.