The Biden administration announced Friday that federal student loan payments would remain suspended until January 2022, extending a pause that began at the start of the pandemic and was due to end next month. The education department said this would be the last extension.
Borrowers will no longer have to make payments on federal student loans during the moratorium, interest rates will be set at 0% and loan recovery efforts will be halted. The suspension will end on January 31, 2022.
Education Secretary Miguel Cardona said this is meant to give borrowers enough time to prepare to resume their payments.
“As the economies of our nations continue to recover from a deep hole, this eventual extension will give students and borrowers the time needed to plan for resumption and ensure an easy route to repayment,” Cardona said in a statement. .
The Trump administration suspended federal student loan payments in March 2020 and later extended them until January 2021. Soon after President Joe Biden took office, the pause was extended to 30 September.
But as the economy recovers, there remain concerns that borrowers will be unwilling to continue making payments so early. Democrats, including Senate Majority Leader Chuck Schumer, NY and Sen. Elizabeth Warren, Mass., recently pressured Biden to extend the moratorium until at least March 2022.
In a joint statement Friday, Schumer, Warren and Representative Ayanna Pressley, D-Mass, lauded the expansion, saying it provides relief to millions of borrowers facing a devastating financial rock.
Democrats said the payment pause has saved the average borrower hundreds of dollars per month, allowing them to invest in their futures and support their family’s needs.
The Education Department has expressed concern about the administrative hurdles regarding the sudden resumption of loan payments. In a November 2020 report, the department said this would be a huge burden for the government and the lenders.
In its Friday announcement, the education department said the final extension provides enough time for payments to resume smoothly.
The expansion drew criticism from conservatives, including Representative Virginia Fox, the top Republican on the House Education and Labor Committee.
I am sorry that Secretary Cardona did not show real leadership by working with Congress and converting the portfolio back into repayment by October 1 this year.”
The Biden administration announced the relief as it faces mounting pressure from some Democrats to wipe out massive swaths of student loans. Schumer and Warren have urged Biden to use his authority to cancel $50,000 in student loans for all borrowers, saying it will spur the economy and help families hit by the pandemic .
But Biden has questioned whether he has the right to that kind of mass cancellation and has asked the Departments of Education and Justice to study the issue. The president has backed the cancellation of up to $10,000 in student fees, but Biden says Congress should do so.
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