Here's how up to $20,000 in student loan forgiveness could affect your credit score and ability to borrow - CNBC
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Don't expect a 'huge' effect on your credit score
Student loan forgiveness will probably have a modest impact on your credit score, said Ted Rossman, a senior industry analyst at CreditCards.
) Forgiveness that reduces or even eliminates your monthly student loan payments could lower that ratio, "potentially helping you qualify for a larger mortgage, car loan or credit card limit," Rossman said.
Make sure you save a record of your reduced debt from your student loan servicer in case you need it as proof.
Borrowers in default have a chance to clear their record
The Education Department has also recently announced that it will be helping some 7 million student loan borrowers out of their defaulted status.
New payment plans could help borrowers' credit, too
Along with President Joe Biden's announcement last week on student loan forgiveness, he said the Education Department was moving to offer borrowers with undergraduate loans a new income-driven repayment plan that could slash their monthly bills in half.
The plan could reduce the average annual student loan payment by more than $1,000, according to the White House.
Department of Education is saying the application for loan cancellation will be available by early October, and that borrowers could see the relief within six weeks.
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