KANSAS CITY, Mo — President Joe Biden announced Wednesday that he will again extend the student loan moratorium through the end of the year.
Additionally, he forgave $10,000 to borrowers who earn less than $125,000 a year.
Those with undergraduate loans can also cap their payment at 5% of their monthly income.
“The burden of knowing that the loans are going to have to be repaid, at all times, is always something that hangs over my head,” said Simone Baldeh, a 23-year-old student.
Baldeh is returning to UMKC for his psychology degree this fall. She took a semester after attending Missouri Western University for two and a half years.
“I had a scholarship, but it wasn’t a full scholarship — it wasn’t a full ride,” Baldeh said. “I was lucky to have a scholarship, but I also had to take out a loan. Not just my first year, but also my second year.
Currently, Baldeh has student loan debt of over $20,000. This does not include the online courses she will take this fall or the cost of graduate school.
She has two jobs at the moment, as a nanny and a dog walker, just to earn some money.
“But it’s not enough to pay for a college education, it’s not enough to pay for tuition, room and board,” Baldeh said. “I don’t know how I’m going to pay it back, I don’t know how long it will take me to pay it back, I don’t know how I’m supposed to pay it all back because it’s a lot of money.”
Associate attorney James Boyce says the first thing borrowers should do is figure out who their agent is, what type of loan they have and how much they owe. From there, they can choose from six different income-based plans.
The White House presented a new plan on Wednesday.
“The formula is going to be lower, which means your payment will be lower. And if your balance was lower, it will only last 10 years instead of 20. So that means fewer payments over a shorter period,” Boyce said.
Whether a borrower qualifies for ten or 20 years depends on whether their balance was less than $12,000 to begin with.
Borrowers should also check if they are eligible for the Civil Service Loan Forgiveness, which is aimed at people who work in government or non-profit organizations. Students who attended for-profit schools that lied to or took advantage of can also be considered for debt cancellation.
Filing for bankruptcy is also an option, but Boyce says that can get tricky with student loans.
“You can enforce principal payments through a Chapter 13 bankruptcy. You can file one of these conflicting actions, one of these lawsuits, and seek a settlement,” Boyce said. “You have to claim undue hardship and essentially file a lawsuit in bankruptcy to have these loans cancelled.”
The Biden administration also recently announced something called the Fresh Start program, which means that if you have loans that are far enough in arrears, you may be able to pull yourself out of default.
“The problem is there are steps to take and time is limited,” Boyce said. “If you can’t legitimately afford anything, you can probably get a zero dollar payment plan.”
Boyce advises borrowers to call their student loan officer and make sure their contact information is up to date. Sevicers often come up with new programs that borrowers can benefit from.