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At this point, the federal student loan moratorium has been going on for more than two years, and it’s not yet clear what the Biden administration is planning to do about it.

Between rumors of student loan forgiveness and questions about the possibility of extending the moratorium further into 2022, the fact remains that over 44 million student loan borrowers are currently without a clear direction as to what’s supposed to happen next.

Below, Select details what you need to know about the upcoming Aug. 31 deadline and how the next few weeks could be pivotal if you still have student loans to pay off.

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The student loan moratorium deadline is approaching

1. Hopes of student loan forgiveness are waning

There appears to be a large political divide when it comes to student loan forgiveness and whether it should or shouldn’t happen. That said, the real issue lies within the limits of presidential powers.

In a Feb. 2021 town hall, President Joe Biden admitted to being unsure if he could sign away student debt, even though one of his campaign promises was to eliminate federal student loans for qualifying Americans. House Speaker Nancy Pelosi affirmed that sentiment last year by stating he doesn’t actually have that ability. If Congress is needed to make the call, the Republicans so far has remained adamant about blocking any student loan forgiveness plans brought forth by the Democrats.

Without any distinctive action taken yet nearly 18 months into the Biden presidency, student borrowers are left wondering if loan forgiveness will ever come to fruition — if any executive action is taken, it will likely be met with court challenges as well.

2. If you’re eligible for Public Service Loan Forgiveness, apply before Oct. 31

3. Interest rates are rising, so consider refinancing

The Federal Reserve has been attempting to tackle recent record-high inflation by consistently raising interest rates. However, the existence of higher interest rates also means loan products including mortgage, student loans, credit cards and auto loans are becoming more expensive as a result.

While interest rates for federal student loans are effectively down to zero during the moratorium, they will return to normal once payments resume after Aug. 31.

According to the Education Data Initiative, the average student loan interest rate is 5.8% — thankfully, there are plenty of student loan refinancing options offering interest rates lower than that. Before you consider refinancing your student loans, keep in mind that by doing so, you’ll lose federal protections and miss out on any chance of forgiveness or assistance from any federal agency. Consider refinancing private student loans you may have now, and wait until there’s a decision made on the federal student loan moratorium before you evaluate refinancing your federal loans.

If you’re still not eligible for any student loan forgiveness programs, refinancing your student loans (especially if they are private loans) may make sense — I actually originated my student loans from a private bank and strategically refinanced six times to a mere 2.25% interest rate with a personal line of credit. By lowering your interest rate, you can prevent your loan balance from skyrocketing out of control.

Here are a few of our favorite student loan refinance providers to consider:

SoFi Student Loan Refinancing

  • Cost

    No origination fees to refinance

  • Eligible loans

    Federal, private, graduate and undergraduate loans, Parent PLUS loans, medical and dental residency loans

  • Loan types

  • Variable rates (APR)

    From 2.24%; from 2.37% for medical/dental residents (rates include a 0.25% autopay discount)

  • Fixed rates (APR)

    From 2.99%; from 3.12% for medical/dental residents (rates include a 0.25% autopay discount)

  • Loan terms

  • Loan amounts

    From $5,000; over $10,000 for medical/dental residency loans

  • Minimum credit score

  • Minimum income

  • Allow for a co-signer

Earnest Student Loan Refinancing

  • Cost

    No origination fees to refinance

  • Eligible loans

    Federal, private, graduate and undergraduate loans

  • Loan types

  • Variable rates (APR)

    Starting at 1.99% (rates include a 0.25% autopay discount)

  • Fixed rates (APR)

    Starting at 2.98% (rates include a 0.25% autopay discount)

  • Loan terms

    Flexible terms anywhere between 5-20 years

  • Loan amounts

    A minimum of $5,000, up to $500,000 (residents of California must request to refinance $10,000 or more)

  • Minimum credit score

  • Minimum income

  • Allow for a co-signer

Laurel Road Student Loan Refinancing

On Laurel Road’s secure site

  • Cost

    No origination fees to refinance

  • Eligible loans

    Federal, private, graduate and undergraduate loans, Parent PLUS loans, medical and dental residency/fellowship loans, plus special pricing and reduced rates for health-care professionals (physicians, dentists, optometrists and physician assistants)

  • Loan types

  • Variable rates (APR)

    From 1.89%; from 2.28% for resident rates (rates include a 0.25% autopay discount)

  • Fixed rates (APR)

    From 2.80%; from 3.08% for resident rates (rates include a 0.25% autopay discount)

  • Loan terms

    5, 7, 10, 15, 20 years (but also offers any term below 20 years, subject to underwriting criteria)

  • Loan amounts

    For bachelor’s degrees and higher, minimum $5,000; for eligible associate degrees in the health-care field, up to $50,000 in loans for non-ParentPlus refinance loans

  • Minimum credit score

  • Minimum income

  • Allow for a co-signer

Bottom line

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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