Federal student loan payment break extended to January 31
The suspension of federal student loan payments, which was scheduled to expire on September 30, has been extended until January 31, 2022. Until that date, federal student loan payments are automatically suspended, interest rates are set at 0% and collection activities on overdue loans are suspended.
This administrative forbearance period was implemented in March 2020 as a form of pandemic relief and has seen several extensions over the past year and a half. The US Department of Education said it would be the last extension of the payment break.
The extension will help borrowers and
The extended payment hiatus comes after weeks of pressure from Democrats like Senators Elizabeth Warren and Chuck Schumer, who argued borrowers and agents were unprepared for resumption of payments on October 1 . In a letter to president biden, Senator Warren and Senator Edward J. Markey cited concerns from duty officers that inadequate staffing, lack of communication and the departure of several federal duty officers overwhelm the system.
The letter also detailed the benefits the break had on borrowers: “Borrowers have reaped significant benefits from the ongoing payment break, taking the opportunity to repay other debts, alleviating the financial pressures owed. loss of jobs or reduced income, and support their families ”. needs, ”he said. “As the economy recovers from this unprecedented crisis, borrowers should not be faced with administrative and financial disaster as they begin to recover.
What should borrowers do next?
With four additional months with no payments required, federal student loan borrowers can continue to progress toward other financial goals. Borrowers can use the payment break to:
Borrowers can also choose to make payments on their federal student loans, although this is not necessary. This will help pay off those loans faster, as all payments at that time will go toward principal, not interest.