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Editor’s Note: Since the writing of this article, the Biden administration has extended the pause on federal student loan repayment through December 31, 2022.

Student loan forgiveness was a hot topic on the campaign trail—but is one that is largely plodding along.

While President Joe Biden has endorsed $10,000 of federal student loan cancellation, few Republicans support blanket student loan forgiveness.

In June, Senate Majority Leader Chuck Schumer again urged Biden to cancel $50,000 in federal student loan debt for every borrower. Biden has asked the Justice Department and the Department of Education to assess whether or not he has the authority to unilaterally cancel student loan debt.

If the answer is “yes,” how much might he cancel? He has maintained that $50,000 is too much, especially given the relatively high incomes of graduates of high-tuition colleges.

Here are types of debt that have been canceled under Biden student loan forgiveness acts, and debt that may be forgiven in the future:

Loan Discharge for the Defrauded and Disabled

One major move Biden and his Education Department made in his first few months in office was discharging loans from for-profit institutions that defrauded students.

In March 2021, a decision was made to discharge nearly $1 billion worth of debt for 72,000 students. This was a continuation of a Trump-era policy, which had provided partial debt relief to those students.

The borrower defense to repayment program had been expanded under President Obama and trimmed under President Trump. This particular ruling applied to students who had had claims approved but had only received partial relief.

In June, the Biden administration discharged more than $500 million in debt for 18,000 former students of ITT Technical Institute, a for-profit school that closed in 2016. The administration is still working through a backlog of claims from the Trump administration.

The Biden administration also moved to forgive more than $1.3 billion worth of debt for 41,000 loan holders with permanent disabilities.

Advocacy groups say the move did not go far enough, and that the administration should forgive the $8 billion in debt held by over 500,000 borrowers who are considered totally and permanently disabled.

So what do these Education Department actions mean for those who do not fit under any borrower defense that has been invoked? The answer is still unclear, but the recent moves indicate that student loan reform is likely to be a key pillar of the administration.

The Latest on the Loan Payment Pause

The CARES Act in 2020 suspended payments and interest accrual on most federal student loans. The administrative forbearance was extended twice under Trump and again under Biden. The payment pause is slated to expire on Jan. 31, 2022.

Advocates see the next few months as an opportunity for the Biden administration to act quickly in terms of reform. Schumer and Sen. Elizabeth Warren have led the charge to urge Biden to continue the payment pause through at least March 2022.

But as of now, payments are on track to resume in February. This may be a good time for borrowers to plan how they will resume payments, look into forbearance or deferral programs if they are not in a position to do so, or consider refinancing with a private lender if they can get a better rate.

What Might the Education Department Cover Next?

On the campaign trail, Biden promised multiple student loan reforms. Some will likely have to be approved by Congress. They include:

• Free community college. In April, Biden promised to make good on that promise with the American Families Plan, which also would increase the maximum Pell Grant by $1,400.

• Overhauling the Public Student Loan Forgiveness (PSLF) program. Candidate Biden said he would streamline the program to make it easier for borrowers to qualify. He suggested $10,000 of forgiven undergraduate or graduate debt for every year of working in a nonprofit or public sector job, for up to five years.

People who have had qualifying public service roles would qualify for the program. The Department of Education is looking into PSLF claims, and Secretary of Education Miguel Cardona has called the current rejection rate “unacceptable.”

• Streamlining Pay as You Earn (PAYE) and Revised Pay as You Earn (REPAYE) programs. On the campaign trail, Biden promised to simplify and streamline these programs, at one point suggesting repayments of 5% of discretionary income for people making over $25,000, with any remaining debt discharged after 20 years. As of this month, the Biden administration is reviewing these programs.

• Permitting student loan debt discharged in bankruptcy. Cases are circulating in the lower courts related to student loans and bankruptcy, challenging the status quo that student loans are rarely forgiven in a bankruptcy filing. But this month, the Supreme Court declined to review a case in which student loan discharge was denied.

Recommended: PAYE vs REPAYE: What’s the Difference?

Loan Forgiveness Plans Right Now

Federal student loan holders have forgiveness options if they meet certain criteria. The Education Department is likely to move forward on some reform fronts, but it may be challenging for certain acts to gain congressional approval.
In the meantime, here are some current programs:

Income-based plans. Income-driven repayment plans, which include PAYE and REPAYE, are meant to forgive any remaining student loan balance after 20 or 25 years of monthly payments that are tied to income and family size.

PSLF. Direct Loan borrowers working for a federal, state, local, or tribal government or nonprofit organization are to have any loan balance forgiven after making 120 qualifying payments. But debt discharge from PSLF has been notoriously challenging.

Disability discharge. Total and permanent disability relieves you from having to repay a Direct Loan, a Federal Family Education Loan, and/or a Federal Perkins Loan, or to complete a teacher grant service obligation.

“Undue hardship” alongside bankruptcy. While bankruptcy alone won’t keep a borrower from having to pay back federal or private student loans, a rare few may be able to prove that continuing to repay student loans imposes an “undue hardship” on them and their family.

Teacher Loan Forgiveness Program. Those who teach at a low-income school or educational service agency for five years and meet other criteria may be eligible for up to $17,500 in federal student loan forgiveness.

Closed-school discharge. If your school closes while you’re enrolled or closed shortly thereafter, you may be able to get your federal loans discharged.

Discharge due to death. If the borrower dies, or the person taking out the loan dies, loans may be discharged. This also applies to Parent PLUS Loans if the parent dies or becomes disabled.

Borrower defense to repayment. This is the umbrella under which many borrowers received forgiveness under the Biden Department of Education for loans from for-profit institutions. Direct Loan borrowers may receive forgiveness if a school did something or failed to do something related to your loan or the educational services that your loan was intended to pay for.

An attorney who specializes in student loans can be helpful in ensuring that a borrower meets the requirements of certain forgiveness scenarios and can help ensure that any paperwork is in order.

Can Private Student Loans Be Forgiven?

When it comes to private student loans, cancellation happens rarely, if ever.

Some private lenders do offer certain protections, such as unemployment protection, in case you were unable to make payments.

If a borrower cannot pay a private loan, they may speak to their lender to determine what programs and paths may be available.

Right now, it is unclear whether broad student loan forgiveness, by the presidential or congressional act, could include private loans.

Recommended: What Is the Student Loan Forgiveness Act?

The Takeaway

Biden student loan forgiveness has totaled more than $2 billion for particular borrowers, but some advocates want to see much more. Will the student loan forgiveness 2022 story be one of sweeping or incremental change? Time will tell.

And as of now, the pause on federal student loan payments ends in January. Knowing your options to repay your student loans, which may include refinancing with a private lender—resulting in one new loan, with an eye toward a lower rate—will be helpful in creating a path forward.

If you refinance your federal student loans with SoFi, you can lock in your rate now, and make no payments until February 2022.

Photo credit: iStock/simarik

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

It’s a new year—and the perfect time to take a fresh look at your student loans. With recent changes in the financial landscape, now is a great time to consider a change if you are one of the 40MM+ individuals with student debt. Refinancing and consolidating student loans can be a financial game changer: You can pay your debt in a single monthly payment and potentially lower your rates—meaning less interest and more peace of mind.

Here are our top five tips to help you navigate and understand student loan refinancing.

1. Know Your Loans

Make sure to take inventory of the current loans you have. Which lenders are they with? Are they private or federal loans? What’s the balance owed and the interest rate for each loan? It’s important to know where you are today to better evaluate your best options for student loan refinancing.

For example, the Federal Direct Loan consolidation program won’t let you combine your private and federal student loans to a single payment or interest rate. You should also understand what deferment and forgiveness benefits are, and if they’re applicable to your loan and circumstances.

2. Do the Math

In order to better understand how much you’ll benefit from refinancing, it’s best to know your numbers: Specifically, the overall balance owed and average interest rates across both your federal and private loans. Once you have that info, you can use an online Student Loan Calculator to see how refinancing will impact your current situation and the monthly and lifetime savings you can expect (if applicable).

3. Understand Fixed vs. Variable Rates

This is important, as most lenders will offer both fixed and variable interest rate options when refinancing student loans. Which one should you choose?It depends: Do you want your rate to stay constant long-term or start out low and adjust incrementally? Head over to our fixed vs. variable rates page for a helpful overview of fixed and variable rates to see what best suits your needs.

4. Choose a Lender

When it comes to choosing a lender for student loan refinancing, you’ve got options. There are many helpful articles and online resources to find the right lender for you, but ultimately you’ll want to find a refinancing partner that offers a competitive rate. Additional benefits can also be helpful—like payment deferral (in case of job loss) or discounts on other financial products that can save you money.

Here are a few sites that may be helpful in finding the best match for your student loan refinancing: Student Loan Hero , Magnify Money , and Lendedu .

5. Lock In Your Rate

The sooner you refinance your student loans, the quicker you can start meeting your financial goals with a simpler monthly bill or a lower interest rate. So don’t wait—make 2022 the year for action. Check your rate in 2 minutes.

Want event more tips on student loan refinancing? Explore SoFi’s student loan help center for guides, resources, and advice on all thins student loans!

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
SLR17154

The put to call ratio (PCR) is a mathematical indicator that investors use to determine market sentiment. The ratio reflects the volume of put options and call options placed on a particular market index. Analysts interpret this information into either a bullish (positive) or bearish (negative) near-term market outlook.

The idea is simple: the ratio of how many people are betting against the market versus how many people are betting in favor of the market, should provide a gauge of the general mood investors are in.

A high put-call ratio is thought to be bearish (because more investors are taking short positions) while a low put-call ratio is thought to be bullish (because more investors are taking long positions). Investor Martin Zweig invented the put-call ratio and used it to forecast the 1987 stock market crash.

What are Puts and Calls?

Puts and calls are the most basic types of options contracts. Options contracts give holders the right, but not the obligation, to buy or sell a specific number of shares of a given security by a certain date (the expiration date) at an agreed upon price (the strike price). For both puts and calls, one options contract is usually for 100 shares of the underlying security.

The seller of an option is also sometimes called the writer. Options writers receive a fee, called a premium, in exchange for the risk of having to buy or sell shares when the holder of the option chooses to exercise their contract.

There are many factors that influence an option’s premium, and many ways to calculate the value and the risk of options, including the Black-Sholes, trinomial, and Monte Carlo simulations.

Those interested in trading calls and puts and other options strategies may want to research the details further with our options trading guide.

For now, we’re concerned with the basics of call vs. put options so we can better understand the put-call ratio and what it means.

Puts

A put option (or “put”) gives its owner the right to sell a certain number of shares at a predetermined price by a certain date. Investors may also refer to puts as “short positions” because they represent bearish bets on a security’s future.

An investor who buys a put has the option to sell the stock at some point leading up to the expiration date of the contract. Investors may use puts in a variety of ways within the portfolio. For example, a protective put allows an investor who already owns the underlying asset to benefit even if the price of that stock asset goes down.

Calls

A call gives its owner the right to buy a certain number of shares at a predetermined price by a certain date. Calls are also referred to as long positions because they represent bullish bets on a security’s future.

An investor who buys a call has the option to buy the stock at some point leading up to the expiration date.

Recommended: Popular Options Trading Terminology to Know

What Is Put Call Ratio?

The put-call ratio is a measurement of the number of puts versus the number of calls traded on a given security over a certain timeframe. The ratio is expressed as a simple numerical value.

The higher the number, the more puts there are on a security, which shows that investors are betting in favor of future price declines. The lower the number, the more calls there are on a security, indicating that investors are betting in favor of future price increases.

Analysts most often apply this metric to broad market indexes to get a feel for overall market sentiment in conjunction with other data point. For example, the Chicago Board Options Exchange put-to-call ratio is one of seven factors used to calculate the Fear & Greed Index by CNN Business.

The put-call ratio can also be applied to individual stocks by looking at the volume of puts and calls on a stock over a certain period.

Recommended: Buying Options vs Stocks: Trading Differences to Know

How to Calculate the Put-Call Ratio

The put-call ratio equals the total volume of puts for a given time period on a certain market index or security divided by the total volume of calls for the same time period on that same index or security. The CBOE put call ratio is this calculation for all options traded on that exchange.

There can also be variations of this. For example, total put open interest could be divided by total call open interest. This would provide a ratio for the number of outstanding puts versus the number of outstanding calls. Another variation is a weighted put-call ratio, which calculates the dollar value of puts versus calls, rather than the number.

Looking at a put call ratio chart can show you how that ratio has changed over time.

Put-Call Ratio Example

Suppose an investor is trying to assess the overall sentiment for a stock. The stock showed the following volume of puts and calls on a recent trading day:

Number of puts = 1,400

Number of calls = 1,800

The put call ratio for this stock would be 1,400 / 1,800 = 0.77.

How to Interpret the Put-Call Ratio

A specific PCR value can broadly be defined as follows:

•   A PCR of less than 1 implies that investors are expecting upward price movement, as they’re buying more call options than put options.

•   A PCR of more than 1 implies that investors are expecting downward price movement, as they’re buying more put options than call options.

•   A PCR equal to 1 indicates investors expect a neutral trend, as purchases of both types of options are at the same level.

However, while PCR has a specific, mathematical root, it is still open to interpretation, depending on your options trading strategy. Different investors might take the same value to have different meanings.

Contrarian investors, for example, typically believe that the majority is wrong. The best move is to act contrary to what others are doing, in this view. If everyone else is buying something, contrarians believe it might be a good time to sell, or vice-versa. A contrarian investor might therefore perceive a high put/call ratio to be bullish because it suggests that most people believe prices will be heading downward soon.

Momentum investors believe in trying to capitalize on prevailing market trends. “The trend is your friend,” they might say. If the price of something is going up, it could be best to capitalize on that momentum by buying, in this view. A momentum investor could believe the opposite, and that a high PCR should be seen as bearish because prices could be trending downward soon.

To take things a step further, a momentum investor might short a security with a high put-call ratio, hoping that since most investors appear to already be short, this will be the right move. On the other hand, a contrarian investor could do the opposite and establish a long position, based on the idea that what most people expect to happen is the opposite of what’s actually coming.

The Takeaway

The put-call ratio is a simple metric used to gauge market sentiment. While often used on broad market indexes, investors may also apply the PCR to specific securities. Calculating it only involves dividing the volume of puts by the volume of calls on the market for a security.

The put-call ratio is one factor you might consider as you start trading options. A platform like SoFi’s allows you to get started with options trading, thanks to its intuitive and user-friendly design. Investors can also reference a library of educational resources about options.

Photo credit: iStock/PeopleImages

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