Each of Georgia’s 1.6 million federal student loan borrowers has on average $42,000 in debt totaling over $68 billion.
Student loan repayment was paused early on during the pandemic by former President Donald Trump’s administration and once again in August by the current administration of President Joseph R. Biden, with payments scheduled to restart on January 31.
In late December, President Biden announced that he would again extend the repayment freeze another 90 days to May 1, 2022.
So what does that mean for Georgian’s with federal student loans?
Borrowers do not have to worry about their loans accruing interest while payments are frozen.
According to Andrew Pentis, a certified student loan counselor at Student Loan Hero, this is an opportunity for people with loans to save and prepare for when payments start again this spring.
“In Georgia, where the average monthly payment is $277,” Prentis said. “You can imagine how helpful the moratorium would be— to replenish emergency savings or just to have breathing room in their budget.”
The pause on repayment does not extend to students who have private loans. For those borrowers Pentis suggests that if they are struggling to make their payments they can contact their loan servicer.
Pentis said that refinancing with a different private lender can be the best option for some borrowers if they are able to get a significantly lower monthly interest rate.
“Or they could extend their loan repayment term to more years, and that would lower their monthly payment making it more affordable,” he suggested.
Earlier this month, Navient (formerly Sallie Mae), announced they would settle in a lawsuit with 39 states (including Georgia) over predatory lending practices.
The settlement includes canceling approximately 66 thousand loans and a one-time $145 million payment to the 39 states in the lawsuit. Navient will end up having to cancel $1.7 billion in student loans, all of which are private and don’t have federal backing.
The Houston Defender reported that the majority of students eligible for cancellation borrowed money from Sallie Mae to attend a for-profit college between 2002 and 2010, in one of the 39 states that sued.
Borrowers with federal loans through Navient will have their account transferred to another federal loan servicer (i.e. Maximus, Aidvantage).
While on the campaign trail Biden made the issues of student debt and loan forgiveness central to his platform.
Since taking office Biden has yet to take action on his promise to cancel $10,000 in loans for each borrower. However the Build Back Better Act, which passed the house in November includes increased funding for HBCUs.
Build Back Better will also increase the maximum Pell Grant award by $550, combined with a $400 increase in the President’s FY22 budget, an individual Pell Grant recipient can be awarded an extra $950.
A nearly one thousand dollar increase per award has the potential to benefit thousands of students attending HBCUs where 75 percent of undergraduates receive a Pell Grant to fund their education. On average only 39 percent of undergraduate students in the U.S. are awarded a Pell Grant.
The Senate is expected to vote on the Build Back Better Act early this year.