(Nerdwallet) – Federal student loan borrowers are anxiously waiting to see if the loan cancellation – which President-elect Joe Biden says will make a priority – becomes a reality.

Industry experts say borrowers shouldn’t be counting on it.

“I think we’re closer to loan cancellation than ever before, but that doesn’t mean I think we’re close,” says Betsy Mayotte, president and founder of the Institute of Student Loan Advisors, a non-profit group. . Mayotte says other priorities such as the pandemic and accompanying recession are likely to delay an eventual pardon.

Biden’s transition team reaffirmed on Jan. 8 its support for $ 10,000 student loan cancellation for every federal student loan borrower as part of additional coronavirus relief, but only through congressional action – quashing speculation about a quick remission via executive order.

Currently, 45.3 million Americans – about 13.7% of the total United States population – hold federal student loans. Approximately 15 million borrowers would see their student loan debt wiped out with $ 10,000 overall loan forgiveness per borrower, according to NerdWallet analysis of federal student loan data.

Is forgiveness still possible?

The crucial details of any potential forgiveness offer remain unclear. The decision to go through Congress rather than using executive action means that every facet is up for debate.

For example, we do not know if there will be an income threshold to be eligible or if it would be a general rebate. There’s also no plan for what qualifies for the loan: would parent or graduate PLUS loans get a rebate – or commercially owned FFEL or Perkins loans, for that matter? It seems that private student loans are no longer the order of the day.

Even the pardon amount could change: Future Senate Majority Leader Chuck Schumer, DN.Y., and Senator Elizabeth Warren, D-Mass., Have offered a more ambitious $ 50,000 global pardon in the fall latest. But that seems less likely to pass in a divided Senate.

“It doesn’t look like there will be a massive pardon given the concerns of the more conservative Democrats in the Senate,” said Robert Kelchen, associate professor of higher education at Seton Hall University in South Orange, New Jersey.

“A modest forgiveness could happen,” he said.

Federal payment break should be extended

Right now, federal student loan borrowers don’t have to make payments due to an interest-free break, called forbearance, which has been in effect since March 13 and twice extended by President Donald Trump . It is set to expire on Jan.31, but Biden’s transition team has said he intends to extend the current federal student loan forbearance from day one.

It is not known how long this extension would last. For now, experts say it’s smarter to focus on a strategy for restarting payments rather than planning a pardon.

According to Scott Buchanan, executive director of the Student Loan Servicing Alliance, a nonprofit trade association representing student loan services, repayment should be complicated when it reboots because the system was not designed to turn on. and turn off.

Kelchen agrees: “Whenever [payment] restart, there will be a sharp increase in defaults and defaults – some people may be difficult to contact, some people may not be able to pay, some people may not want to pay. It is just an administrative nightmare to start it all at once.

While the break continues, here’s what you can do to prepare.

If you are having financial difficulties

Those who are out of work or have experienced other financial hardship from the coronavirus should take the break to focus on paying for essentials like rent, groceries or utility bills.

Before reimbursement restarts, plan to contact your service agent to enroll in one of the following programs:

• a income based repayment plan will set your payment amount to part of your income and extend the length of time you will pay off the debt. If you don’t have a job, your payments could be as low as zero.
• a postponement of unemployment will allow you to defer payments for up to 36 months, but interest will accrue and be added to the loan total when you start making payments.

If you defaulted on your student loans before the pandemic, contact your service agent about rehabilitating your loans. Each month you spent in abstention counts towards the nine months required for rehabilitation.

If your finances are in good shape

During the break, if you haven’t experienced job loss or other financial insecurities, prioritize paying off any high-interest debt, like a credit card. You can also fill your emergency fund with enough money to cover three to six months of expenses.

If you want to repay your loans

Mayotte encourages borrowers whose finances are in good shape to take advantage of this zero interest period by making additional payments.

“This is an incredible opportunity that we have never seen before and that we may never see again,” says Mayotte.

You can still repay your loans during the break, but you will need to contact your agent to do so.

Or consider setting aside money you would otherwise spend on student loans and making a lump sum payment on your loan at the highest interest rate right before repayment resumes and interest accrues. You will maintain financial flexibility and achieve the same result.

If you’d rather wait and see if forgiveness will happen, make the required payments, but don’t pay extra until the relief amount is firm.

If you have private student loans

Private student loan borrowers should not receive federal relief, experts say. If you are having financial difficulty, contact your lender about relief options, such as a short-term forbearance (with accrued interest) or a temporarily reduced payment.

If you have private student loans and your finances are strong, you might consider refinancing to take advantage of historically low interest rates. Federal student loan borrowers should not refinance privately now to ensure they don’t miss out on any potential future discounts.

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Anna Helhoski writes for NerdWallet. Email: anna@nerdwallet.com. Twitter: @AnnaHelhoski.

The article Hope to forgive a student loan won’t pay the bills originally appeared on NerdWallet.

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