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Student Loans 2022: Options, Impacts, and Forgiveness

Student Loans 2022:  Options, Impacts, and Forgiveness
November 12, 2021 | 11mins Read

Americans have always sought higher education as a way to pursue their dreams and aspire to a brighter future. However, the surge in applicants combined with the ease of acquiring a student loan has led to a bloated debt crisis in the United States. Add to that an economy-crushing pandemic and we’re suddenly faced with an unprecedented financial situation. 

The Biden Administration is working furiously on a strategy to address the current student loan debt crisis, so we thought we’d explore the options currently being considered and how they’ll impact American borrowers.

The Federal Reserve estimates that those Americans who have opted to advance their education by taking out student loans have racked up a staggering 1.7 trillion in the second quarter of 2021, a 3% increase from the second quarter of 2020. Further, looking back to the second quarter of 2011, Americans owed $905 billion—that’s a 94% increase for those ten years.

Higher tuitions. Easy loans.

The troubling fact is that this trend is not likely to decline any time soon, as the simplicity of qualifying for a student loan added to the steady rise of tuition that colleges and universities impose on their students is a recipe for even great debt. What’s more, these ever-increasing tuition costs have adversely affected individual student loan borrowers. In 2005, the average personal student debt level was $17,000 but, at present, has grown to $30,000.

The federal government has attempted to subdue the problem, and recently, President Biden has joined in the discussion (with support, no doubt, from the First Lady, who is a seasoned educator.)

What Can President Biden Do?

The matter of student loan forgiveness has been on President Biden‘s agenda from the moment he took office.  The President has been under increasing pressure from the progressive members in his party to develop a plan for across-the-board student loan forgiveness. Clearly, this is proving to be easier said than done.  In order to find a financially viable solution outside of total student loan forgiveness, Biden has been focussing on specific areas of student loan relief, in addition to some already in place.

First, with the urging of President Biden, the U.S. Department of Education has extended the student loan payment suspension on student loan repayment, interest, and collections until January 31, 2022. It’s hoped that student loan defaults and late payments may fly under the radar by continuing this student loan pause.

The CARES Act passed by Congress and supported by President Biden was initiated to give the population general COVID relief and act as a life preserver for student loan borrowers. The CARES Act makes it possible for employers to help their employees who owe student loan debt by paying up to $5,250 toward their loans, and the employees would not owe U.S. federal income taxes on the payments. Despite the Administration’s best efforts, student loan forgiveness is minimal, and any total student debt forgiveness is not foreseeable in the near future.

Debt repayment and the road ahead for borrowers

As the Biden student loan pause comes to a close at the end of January 2022, borrowers must be in the know when it comes to the road ahead regarding debt repayment. Here are some of the many (temporary) solutions suggested by the Biden administration to help ease borrowers back into the loan repayment cycle.

Student loans: Biden’s proposed solutions

  • A brief 90-day grace period has been proposed during the first several months of repayment, which will see zero penalizations for debtors with late payments.
  • Relaxed income-verification criteria for income-driven repayment plans have been proposed, including enabling borrowers to apply for refinancing over the phone with their loan servicer to reduce backlogs on refinancing applications.
  • Borrowers who are in arrears on their federal student loans are likely to be immediately reinstated.

Nothing is set in stone, however. These proposed transitionary aids have not yet been formalized but are being discussed. Meanwhile, it is recommended that borrowers contact their loan servicer for further information on their expected monthly payments to begin in February of 2022. Borrowers whose financial circumstances have deteriorated since early 2020 may be eligible to request that their payments be taken forward under an income-driven repayment plan.

Student loan pause: News and updates

It has been a long time coming, but a highly redacted memo dealing with student loan debt cancellation has finally been released. As a result of this, experts think that although this document has little information, its presence shows to them that President Biden is legally able to cancel all debt, but lacks the political will to do so. As a result of the memo’s recent discovery, supporters were reminded of what President Joe Biden had pledged during his campaign for the 2020 presidency.

Better management of student loans: Biden’s student debt crisis solution

President Biden‘s best intentions to move towards student loan forgiveness have been unsuccessful so far. Government intervention has helped to a certain extent, but it is not the total solution. The best remedy to the escalating student loan crisis is education and better debt management.

If borrowers could access their student loan information at their fingertips, i.e., their smartphones with a user-friendly app, they would be well prepared to repay existing loans and make wiser decisions about future borrowing.

Spinwheel’s debt API makes student loan debt management easy and convenient

Spinwheel is a leader in embedded debt APIs and offers a platform that helps financial services assist borrowers with their student loan debt management quickly and easily. Our debt API helps implement an impactful and user-friendly debt management experience to maximize your application’s engagement. We improve your services and products with real-time data plus a layer of intelligence that improves borrowers’ financial literacy for better debt management and debt repayment outcomes.

Spinwheel’s no-code drop-in module makes system integration a snap for developers and gets them up and going in a flash. In addition, Spinwheel‘s white-label drop-in module allows you to create custom branding in an intuitive wireframe.

Stop by and learn how the most powerful and developer-friendly debt API can help make your business more engaging and user-optimized.


About the author: Spinwheel is on a mission to make it easier to manage debt. Our Loan APIs make it easy to embed consumer loan data, including credit card debt, student loans, personal loans, auto loans, and mortgages, directly into your app or product. With just one connection, you'll be able to help your business and your users improve financial outcomes. We call this Better Debt. Read More >

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