Covid-19 reliefs such as improved unemployment benefits and the moratorium on evictions end. It comes out bad news for student loan cancellation.
Here’s what you need to know – and what it means for your student loans.
Relief from Covid-19
Improved federal unemployment benefits and the federal moratorium on evictions end, which could lead to financial hardship for millions of Americans. This financial stimulus has been the backbone of a financial lifeline amid the Covid-19 pandemic. Let’s start with what the end of each of these federal stimuli means, and then move on to what it means for your student loans and your student loan forgiveness.
The subsidized unemployment benefits will end this week
- Federal unemployment insurance strengthened under the American Rescue Plan, the stimulus package that Congress passed earlier this year, will end on September 6;
- It could affect more than 7.5 million Americans, according to the Century Foundation;
- Millions more could see their unemployment benefits reduced; and
- 26 states have already cut unemployment insurance.
Moratorium on evictions could leave 750,000 Americans homeless
- The US Supreme Court ended the federal moratorium on deportations last week, which could affect 750,000 Americans by year-end;
- The court said the Centers for Disease Control and Prevention (CDC), which enacted the moratorium on evictions, did not have the legal authority to stop evictions without further authorization from Congress;
- Goldman Sachs estimates that more than 3.5 million households collectively owe homeowners $ 17 billion in rent arrears;
- The potential for hundreds of thousands of Americans to lose their homes comes as the spread of Covid-19, including the Delta variant, increases;
- Congress has allocated $ 46 billion in rent relief for states and local communities, but only a fraction has been consulted.
What this means for student loans and student loan cancellation
The end of improved federal unemployment insurance and the moratorium on evictions is potentially bad news for the large-scale cancellation of student loans. The two financial aid measures emerged during the Covid-19 pandemic – one from Congress and one from the CDC – to help Americans stay afloat financially. However, with the end of both, it could signal a policy change that could have implications for large-scale student loan cancellation.
First, the end of this fiscal stimulus may signal a lesser inclination to spend federal dollars on financial aid programs such as student loan cancellation. Likewise, student loan relief under the Cares Act – the $ 2.2 trillion stimulus package – will end on January 31, 2022. This means the temporary forbearance of student loans, which did not include no mandatory student loan payments, and no new interest accrued on federal student loans, will end. , and student loan borrowers will resume paying off their student loans at their usual interest rate. Despite the end of this student loan relief, neither the President nor Congress has announced plans to cancel student loans on a large scale. (That said, President Joe Biden has canceled nearly $ 10 billion in student loans since becoming president. Here’s what the Biden student loan forgiveness means for your student loans and how to know if you qualify for it. student loan forgiveness).
Second, the court’s decision to suspend the moratorium on evictions and allow evictions to resume has parallels with the cancellation of student loans. The court found that the CDC, which is part of the executive branch, did not have the legal authority to enact the deportation ban because Congress had not authorized it. Likewise, the legal question with a large-scale student loan cancellation is whether the president (or the US Department of Education), who is part of the executive, has the legal authority to cancel an unlimited amount. student loan debt for all student loans. borrowers without further authorization from Congress. Biden said he didn’t think he had such legal authority, which was supported by House Speaker Nancy Pelosi (D-CA), among others. Senator Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) say the President has existing legal authority, which was granted to him by the Higher Education Act of 1965. In Ultimately, unless Congress passes large-scale student loan cancellation legislation, a court – including the United States Supreme Court – could be the final arbiter of the legality of the loan. a large-scale student loan forgiveness. If the federal moratorium on evictions is a foretaste, it could be bad news for the large-scale cancellation of student loans.
With UI and the eviction moratorium ending this year, and student loan relief in January, make sure you’re financially prepared to pay off your student loans. Find out about all of your student loan repayment options. Here are some popular ways to save money: