In a landmark move, President Joe Biden vowed to erase Federal student debt for Americans who make less than $125,000 a year. The initial announcement, which came on August 24, includes the promise to forgive up to $10,000 of debt for individuals with outstanding Federal student loans, and up to $20,000 of forgiveness to Pell Grant recipients with outstanding debt. The Federal Student Loan moratorium which has been in place since the start of the Coronavirus pandemic in 2020 is also being extended until December 31, 2022.
What Student Debt Forgiveness Means
This forgiveness program is for U.S. residents who have a Federal student loan. This is not for private loans or student loans from sources other than the Federal Government. The White House didn't roll out program specifics, but according to a White House fact sheet, more information about claiming relief will be announced in the coming weeks.
Borrowers can visit StudentAid.gov/debtrelief for more information and sign up for notifications as more information becomes available. Debt forgiveness applications will be made available before December 31.
How Will Auto Credit Be Affected?
For many, the relief of student debt will open doors and erase some of the debt that may be holding back their credit rating. With thousands less in outstanding debt, many people may see an improvement in their credit scores.
Will It Be Easier To Buy A Car?
Better credit scores lead to ease of borrowing for many. This means it could be easier to qualify for the vehicle loan you need in some cases. However, even if you qualify for student loan forgiveness, an auto loan is never a guarantee, since there are many factors involved in loan qualification, especially if you have poor credit.
When you're a bad credit borrower it's important to go to a lender that works with low credit situations. They have more requirements than a traditional lender that works with good credit. These requirements include bringing in documentation proving you have the ability, stability, and willingness to repay an auto loan, such as proof of income, residency, and a down payment.