5 student loan changes for 2020

By Michael Cammack Last updated Jul 28, 2023

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Education Secretary Betsy DeVos (Photo by Mark Wilson / Getty Images)

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What are the upcoming changes in your student loans?

Here’s what you need to know.

Student loans

There are several burning issues with your student loans. With multiple proposals in Congress and on the trail of the presidential campaign, it is possible that changes to student loans will be made soon. The outcome of the 2020 election, the trajectory of the COVID-19 pandemic and the speed of the economic recovery are several factors that could impact your student loans. If these proposals become law, they could have a major impact on your financial life. Here are some of the top student loan issues to watch out for:

Student loan forgiveness

One of the hottest topics in student loans is student loan cancellation. There are many ways to get student loan forgiveness, but most options take many years. There have been several proposals to write off student loan debt, particularly to Congress. For example, the United States House Democrats proposed $ 30,000 student loan forgiveness, while a US Senate student loan forgiveness plan would write off at least $ 10,000 in federal student loans for all borrowers. More recently, the Heroes Act included a proposal to cancel $ 10,000 in student loans for your federal student loans and $ 10,000 in private student loan forgiveness. However, before the bill is passed in the House, House Democrats amended the heroes law and weakened the final student loan exemption provision. The Heroes Act is unlikely to become law in its current form, which is one of the reasons why you shouldn’t expect another student loan forgiveness soon. Will student loan debt be canceled? Stay tuned.

Cancel student loan debt in bankruptcy

Can You Write Off Student Loan Debt In Bankruptcy? Traditionally, you cannot pay off your student loans in bankruptcy. However, for some borrowers, it is possible to get student loan forgiveness through the bankruptcy process depending on financial hardship. Former Vice President Joe Biden also requested the discharge of student loans in bankruptcy. There is also bipartisan support in Congress to enable borrowers to pay off their student loans in the event of bankruptcy. This is an issue to watch out for, especially during the economic recovery from COVID-19.

Free college

“Free College” was a hot topic during the presidential campaign and in Congress. Senators Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) both called for a tuition-free college. Biden said we should cancel all federal student debt related to undergraduate tuition fees two- and four-year public colleges and universities for borrowers earning less than $ 125,000 per year. However, most “tuition-free” college proposals assume that state governments “pay” (along with the federal government) a portion of this student loan remission. Given the economic impact of the coronavirus on many state coffers as well as concerns about whether many colleges and universities may even reopen this fall, the “free college” may be on the back burner for the time being.

Suspend payments

The CARES Act – the $ 2.2 trillion stimulus package – offered many benefits to student loan borrowers. For example, the Congress suspended all payments for federal student loans until September 30, 2020. The Congress also set interest rates at 0%, therefore, interest will not accrue on your federal student loans during this period. Some states have even entered into agreements with student loan managers to suspend payments for private student loans. It is possible that Congress will extend the forbearance period for federal student loans beyond September 30. The Heroes Act includes a provision to extend the period for one year. That said, any decision to extend would be based on several factors, including the pace of economic recovery by the fall, other stimulus spending such as second dunning check, and the level of bipartite support.

Lower interest rates

There is good news on the horizon regarding interest rates on student loans. Student Loan Rates on New Federal Student Loans fall into their lowest rate ever. This means that if you borrow a student loan this fall, you’ll pay less interest. The same goes for loans with variable interest rates, which are also low due to falling interest rates.

How to pay off student loans faster

What’s the best way to pay off student loans faster? Start with these four options, all free:

Final thoughts

In an election year with a public health crisis, high unemployment and economic hardship, anything can happen with your student loans. In the meantime, make sure you don’t hope or wait for student loan relief that might not come. Take the time to create a student debt repayment plan so that you can pay off your student loans faster.