Obviously, you MUST repay your loan obligation and repaying it by meeting the agreed upon terms is your smartest option. Attempt to plan ahead before that first payment is expected. Many graduates get themselves unable to afford to pay this payment, even however they have attempted to figure out how to do so.Defaulting on your loan is certainly not the way to go. On the off chance that you can discover another alternative, pull out all the stops. Causing a default on your loan will greatly impact your record as a consumer. This can cause you a ton of financial issues for quite a long time to come. Many students have thought about petitioning for financial protection to get free from this tremendous hill of obligation. This isn’t a choice. Much of the time, a bankruptcy won’t discount a student loan. Just in extenuating circumstances will this even bring about a decrease of your loan amount.
One idea to assist in aiding make those payments considerably more attainable is to consider a biden stimulus package student loans . A consolidation allows you to lump all of your student loans into one manageable loan. Nonetheless, on the off chance that you just have one student loan, a consolidation could in any case help you. You can obtain a decrease in your regularly scheduled payment as well as a more drawn out repayment time period. This can go as long as thirty years. Remember that a loan consolidation will make what you pay overall more.
The American Rescue Plan proposed by President Joe Biden is a huge stimulus package aimed to recover the economy. The $1.9 trillion worth stimulus plan was unveiled in mid-January and evoked mixed feelings toward its benefit.
For once, it was a disappointment for student loan borrowers waiting for direct Forgiveness. Unfortunately, there is no stimulus for student loans in the form of debt cancellation. However, some measures still exist which can benefit the debtors.
This guide will discuss the American Rescue Plan’s different elements to create the full picture of the stimulus package for borrowers. Besides explaining the proposal, we will present alternative ways to reduce or eliminate debt obligations.
The $1.9 Trillion Worth American Rescue Plan
The COVID-19 pandemic hit the world economy. Not surprisingly, many people in the U.S lost their jobs, or their income levels decreased. As a result, student loan borrowers also faced difficulties repaying the debt.
Sure, the government allowed a student loan forbearance period for debt collection. In this way, the borrowers are not required to repay the debt, and no interest accrues. According to the latest request, Biden extended the debt collection suspension period by 8months. It means borrowers do not need to worry about repayment till October.
However, with the rescue plan proposal, there appeared more stimulus for student loans. The benefits might not be directly related to the student loan repayment. Yet, they allow borrowers to reduce other expenses or get an extra income. Therefore, borrowers can be better prepared till the debt collection resumes.
This section will present what is included in Joe Biden’s stimulus package. If you do not feel content, keep reading to explore more options available to borrowers.
1. Direct Payments
Similar to the previous stimulus packages, Biden’s plan also involves direct payments to the U.S adults. However, there are differences. First, the amount of payment is much higher than what was proposed in December, $1400 per person compared to $600. Second, more people qualify for the benefit. Biden’s proposal covers dependent children older than 17 and families with immigrated parents.
Besides the direct payment, the plan aims to increase the minimum wage to $15 per hour. However, Congress still needs to approve it before it is put into law.
2. Unemployment Aid
Before discussing what changes Biden brought for unemployed people, let’s get familiar with December’s proposal. In December 2020, the relief plan requested a $300 federal enhancement for unemployed people per week. Besides, the government extended the two pandemic programs targeting the unemployeds by eleven weeks, till around March. They could have expired at the end of December before the extension decision.
However, Biden proposed to increase these benefits. First, he aims to raise the weekly federal enhancement amount to $400 per person. Meanwhile, he also wants to extend the effective date of the two programs till the end of September.
For more information, the two programs are the Pandemic Emergency Unemployment Compensation and the Pandemic Unemployment Assistance plans.
3. Healthcare Services
stimulus for student loans – healthcare
Related to the second point mentioned, there are people who lost their jobs due to the pandemic. Luckily, Biden requested Congress to fund these people’s health insurance premiums. In particular, the ones losing their work-related health insurance through September.
The American Rescue Plan also benefits people enrolled in the Affordable Care Act. Currently, Biden wants Congress to increase the premium subsidies. As a result, people like student loan borrowers dealing with financial challenges will not pay more than 8.5% of their revenue for this aim.
Besides, Biden proposes allocating funds to mental disability and substance use disorder- $4 billion and veteran needs- $20 billion, respectively.
It should also be mentioned that the plan provides funds to develop and test vaccines. Around $70 billion is allocated for these purposes.
4. Rent Assistance
The American Rescue plan might not provide a direct stimulus for student loans, but it helps borrowers deal with other expenses like accommodation costs. If you are a borrower who lost a job during a pandemic and have low-to-moderate income, the government plans to assist you with rent expenses. For this aim, the plan allocates $25 billion.
Besides, utility costs can be expensive to afford if the individual is struggling with finances. Biden also proposes benefits to such people. In more details, $5 billion is set aside for utility bills.
It is no surprise that people become homeless due to their bad finances and debt issues. Hence, the American Rescue plan allocates an additional $5 billion for people at risk of homelessness.
Lastly, if you face a federal eviction moratorium, its expiration is also set to September end.
5. Food Aid
Here are four main things you need to know about food aid proposals.
15% increase in food stamp, extended till September
$3 billion worth of food aid for women, children, and infants
$1 billion funds allocated to nutrition assistance all over the U.S
Partnerships with restaurants to provide food to people in need and workers lost their jobs during the pandemic.
As visible, Biden gives huge importance to deal with hunger and provide necessary food assistance through the American Rescue Plan.
6. Care for Children
Another element of the rescue plan is to allocate funds for child care. These funds will also help child care homes. In total, $40 billion is set aside. Besides, if you have a child, you will be able to get more tax credit, around half of the spending for children younger than 13.