Will Biden’s Student Loan Forgiveness Affect Private Student Loans?

April 28, 2021

Here's a look at what's happening in the student loans crisis for the week of 04/26/21.

100 DAYS INTO BIDEN'S PRESIDENCY, NO MOVEMENT ON STUDENT LOAN FORGIVENESS

Despite student loan forgiveness being a major part of the Biden administration's campaign platform, no executive or legislative action has materialized in the first 100 days.

The Hill reports:

Progressive groups are vowing to raise the heat on President Biden to cancel student debt, a priority issue for a number of Democratic lawmakers including Senate Majority Leader Charles Schumer (D-N.Y.).

It's an issue that Biden has failed to deliver on so far, say the groups. _ Biden has shot down calls to immediately cancel up to $50,000 in student loans and instead supports $10,000 in debt forgiveness. _

Nearly 100 days into a term that has generally been applauded by progressives, the groups say Biden needs to make student debt forgiveness a bigger priority in the next 100 days.

"This is one of the areas where progressives aren't going to take no for an answer at the end of the day," said Adam Green, co-founder of the Progressive Change Campaign Committee (PCCC).

ARE PRIVATE LOANS ELIGIBLE FOR THE PROPOSED STUDENT LOAN FORGIVENESS?

If the aforementioned student loans forgiveness goes through, what happens to private student loans?

Sadly, nothing.

CNBC reports:

One thing we do know: It's not likely the Biden's administration can cancel private loans.

The student loan forgiveness being discussed by the Biden administration — and the forgiveness that Democrats Chuck Schumer and Elizabeth Warren proposed — applies only to those with federal student loans. These are borrowers who took out student loans owned by the U.S. Department of Education.

Private student loan borrowers, on the other hand, are those who take out loans owned by private companies, like online lenders or national banks. Even though the majority of student loan borrowers — about 92% — hold federal loans_ , private student loans still make up 7.71% of the $1.71 trillion total outstanding student loan debt _ in the U.S.

PAY DOWN YOUR STUDENT LOANS BY…MOVING STATES?

This is a new one. States currently experiencing a drop in population may pay off some of your student loan debt for moving there.

From Bankrate.com:

Illinois

  • Buy a house in Illinois and live in it
  • Must have at least $1,000 in student loans, no more than $40,000
  • Must have a credit score of 640 and a debt-to-income ratio of no more than 45%

Kansas

  • Must move to one of the 77 counties designated as Rural Opportunity Zones
  • This may make you eligible for $15,000 in repayments over five years

Maine

  • Must live in Maine as your primary residence
  • Depending on your loans, may be eligible for a $4,000 tax credit

Maryland

  • The SmartBuy 3.0 program provides $5,000 in down payment assistance and student loan repayment assistance for those with at least $1,000 in student loans
  • Program will pay off a student loan equal to 15 percent of the home cost, with a maximum payout of $30,000.

Michigan

  • If you work as a health care provider in a Health Professioanal Shortage are of the state, you may have $200,000 in student debt forgiven.

Of course, not everyone can (or should) move to pay off student loans.

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