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Pause on student loan repayments more valuable than Biden debt forgiveness

Student loan repayments have been on pause since March 2020 when covid-19 plunged the economy into crisis. The moratorium has been extended eight times since then, the latest in November pushed back when borrowers will have to start making payments until then end of August or litigation over President Biden’s student loan forgiveness plan has been settled, whichever comes first.

While Biden’s plan would cancel up to $20,000 at most for some borrowers, the freeze on payments has been more beneficial for others. The reason? those with student loan debt that work in qualifying professions are earning credit toward their debt being discharged under the Public Service Loan Forgiveness program.

The PSLF program cancels all outstanding student debt for workers in the public sector after they make 120 monthly payments, or the equivalent of 10 years. Currently, those who are taking advantage of the program don’t have to make payments but are receiving credit as though they were with the moratorium.

This has allowed them to save far more than they would get under the student loan debt forgiveness which is tied up in the courts. The Supreme Court has said that it will hear arguements on the legality of Biden’t plan in February.