Will my private student loans be forgiven under Joe Biden's plan?Entertainment 

Will my private student loans be forgiven under Joe Biden’s plan?

PRESIDENT Joe Biden can cancel billions of dollars worth of student debt — but does that apply to private loans, too?

We’ll explain everything you need to know if you’re in the red after university.

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We explain Joe Biden’s student loan forgiveness plan and whether it applies to private loansCredit: Alamy

What is Joe Biden’s student loan forgiveness plan?

President Biden reportedly considered $10,000 in debt cancellation for all borrowers, which would free 11.8 million people from student debt and forgive more than $320 billion in loans, according to the Federal Reserve.

Proponents say that easing the debt burden for tens of millions of Americans would help boost the overall economy.

The student loan moratorium currently runs until the end of August and is not expected to be affected by inflation.

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The freeze, first enacted by former President Donald Trump in March 2020, was set to end on May 1.

According to the Federal Reserve, more than 43 million Americans owe a total of $1.7 trillion in student debt.

Will my private student loan debt be forgiven?

Although any student loan forgiveness plan may sound promising to many students, it only applies to federal student loans owned by the US Department of Education.

These are usually only available to US citizens and green card holders, although some other non-citizens are also eligible.

Meanwhile, private student loans are loans owned by private companies such as online lenders and national banks.

Although the majority of borrowers—about 92%—hold federal loans, private student loans still account for 7.71% of total outstanding debt.

How to reduce the cost of private student loans

It’s unlikely that you’ll be able to clear your private student debt, so it’s worth reducing the cost of your loans to make them as cheap as possible.

For example, by refinancing to a loan with a lower interest rate, you will pay off the debt faster.

This means that you will exchange your current private student loan for a new one.

To find a new loan, use a comparison site such as Trusted to get the best deal.

Credible’s search engine lets you compare quotes without affecting your credit score.

As with any loan, make sure you make your repayments every month or you will usually be charged late fees.

Also, be aware that not all applicants will get the market rate, so you may apply and then be offered a worse rate.

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We’ll explain everything you need to know about Joe Biden’s student loan forgiveness plan.

Plus, learn why student loan borrowers could get a bigger tax return this year.

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