President Biden and Congress are debating on cancelling thousands of dollars in student loan debt. As that discussion continues to unfold, it’s worth noting that since the start of the coronavirus pandemic, student borrowers have collectively saved over $90 billion dollars in federal student loan debt.
How did that happen? It has to do with changes to federal student debt payments in the CARES Act last spring. Typically, student borrowers owe the government payments with interest on their federal student loans once they finish college. Under the CARES Act, the government paused all federal student loan payments and brought the interest rate down to zero, meaning any outstanding student loan debt did not accrue interest. A final provision halted the collection of student loan debt in default. Students will continue to enjoy these benefits through at least September 30th of this year, with the possibility of an extension.
The CARES Act federal student loan debt provisions have collectively saved students approximately $5 billion dollars each month, and $90 billion overall, according to the U.S. Department of Education. It’s predicted that students will save an additional $25 billion dollars by the time September 30th rolls around.
These numbers reflect student borrower savings as a whole. How have individual students been affected? It’s estimated that students individually saved $2,000 each in student loan payment so far. But the full effect of paused payments and 0% interest rates will have a greater impact on students’ futures. When these benefits end, borrowers will not have accrued interest on their federal student loan debts for 19 months. That means students will have 19 months’ worth of interest less to pay in order to settle their federal loan debts.
As you consider options to finance your education, it pays to be informed. That’s why Scholarships.com has a wealth of resources on all types of student loans, from federal loans to private loans. Our student loans section is chock-full of articles to help guide you through the loan process. Be sure to visit this link to discover your private student loan options as well.