It’s been a tough few months for those hoping for student loan relief. Since May, two major lifelines have been cut off for borrowers. One is a moratorium on student loan repayments, and the other is an executive order on waivers by the Biden administration.
But for Americans struggling to pay off their loans, there are still some solutions available, and financial advisors can help clients take advantage of them.
“No one is going to erase your loan,” says Mark Kantrowitz, a student loan expert and author of the book. How to Seek More College Financial Aid. However, he added, “There are still some options for personal suspension even if you can’t make your loan payments.”
Meanwhile, the nationwide moratorium expires at the end of August. The repayment freeze, which began in March 2020 as a coronavirus response, has been repeatedly extended by Presidents Donald Trump and Joe Biden. But when Biden and House Republicans reached a last-minute deal in June 2023 to raise the national debt ceiling, it was the moratorium that fell victim to the compromise. The final bill blocked further extensions without approval from both houses of Congress, but that seems unlikely to say the least.
Kantrowitz said, “Future suspensions of payments and interest waivers will lead to new catastrophes, like aliens landing on the White House lawn or the beginning of a zombie apocalypse.” there is a need,” he said.
A Supreme Court decision was then handed down. Last August, President Biden signed an executive order exempting federal student loans of $10,000 per borrower ($20,000 for Pell grant recipients) to cancel an estimated $430 billion in debt. . On June 30, the country’s High Court reversed the order by a 6-3 vote, much to the dismay of many borrowers and their advisers.
read more: 6 Ways Advisors Are Preparing Clients Before Student Loan Payments Start Again This Fall
“My client was disappointed with the results, but given the recent direction of SCOTUS, he wasn’t too surprised,” said founder Paul Monax. Agile Wealth in Littleton, Colorado. “Any of my clients who currently have student loans would have benefited from Biden’s program.”
So what about student loan holders? What options do they still have? How can wealth managers help them? Below are some methods that still exist to turn down the pressure on borrowers.