STATEN ISLAND, NY – The pandemic student loan relief, first passed by Congress in March 2020 through the Care Act stimulus package and recently extended through May, has a hidden benefit for more than 40 million student loan borrowers: student loan cancellation.
According to an article on Forbes.com, the recently announced extension of student loan forgiveness means that federal student loans will not accrue any new interest — which collectively will save borrowers about $5 billion a month. With a three-month deferral of student loan repayment pauses, the equivalent of $15 billion in total student loan cancellation.
In addition to $5 billion a month in interest savings, student loan borrowers will be able to get student loan forgiveness faster by making lower mandatory federal student loan payments, according to Forbes.
The article advises, “Within each month of taking on a temporary student loan, student loan borrowers will receive ‘credit’ to make the student loan payment — even if they don’t make one.” “Therefore, non-payment of student loans will count toward student loan payments to meet public service loan forgiveness and income-based repayment requirements… In all, federal student loan borrowers can qualify for more than two years of federal student loan payments even if they don’t make anything.” In the case of public service loan forgiveness, this represents 20% of the total payments required to obtain student loan forgiveness.”
But can that really count as a student loan cancellation?
“Some might describe this type of student loan forgiveness as a ‘real’ cancellation of a student loan,” Forbes says. “They recognize interest savings or a non-payment account. However, they argue that this differs from direct, large-scale student loan cancellation. Although this is not large-scale student loan cancellation in the traditional sense, this will save student loan borrowers significant money for their loans. their own students.