Student loan payment suspension could be extended again
U.S. Secretary of Education Miguel Cardona said suspending student loan payments could be extended beyond August 31, 2022.
Here’s what you need to know — and what it means for your student loans.
At a US Senate Appropriations Subcommittee hearing yesterday, US Education Secretary Miguel Cardona raised the possibility of a further extension of the student loan payment break.
Here is the exchange:
Senator Jean Shaheen: “Unfortunately, over the past year, the [Biden] the administration made three last-minute extensions to the current [student loan] payment moratorium. I’m sure all of these beneficiaries appreciate this, but it doesn’t give them the kind of certainty they really need when planning their lives… So do you have any idea when this current moratorium will take end ? ”
Education Secretary Miguel Cardona: “I don’t have any information to share with you on when this will end or… what the conversations are about, when this is going to be lifted. I know we have a day, and it may be extended or let it start there, but I will say that our borrowers will be notified well in advance and that we will inform you of this as well.
Student loan payment break: analysis
Let’s analyze Cardona’s comments.
- Decision on suspension of student loan payment: First, Cardona did not say that President Joe Biden had not decided to large-scale student loan forgiveness or suspend student loan payments. On the contrary, Cardona said he had “no information to share”. It could imply that a decision has been made but Biden or he is not announcing that decision now. Alternatively, Cardona’s statement could mean no decision has been made.
- End of the student loan payment pause: Second, “I know we have a day” likely refers to August 31, 2022, when the temporary Covid-19 student loan relief is due to end. Since March 2020, student borrowers have not been required to pay a single dollar in federal student loans. President Donald Trump and Biden have collectively extended student loan relief six times. Congress passed record student loan relief in March 2020 through the Cares Act, the $2.2 trillion stimulus bill, in response to the Covid-19 pandemic.
- Extension of the moratorium on student loans: While Cardona has not committed to extending student loan relief, Cardona has raised the possibility that this may not be the end of the student loan payment pause. That said, he assured student borrowers they would be notified “fairly in advance” of the restart of student loan repayments. However, the restart of student loan repayments is less than three months away. So “adequate notice” may mean less time than necessary to prepare for the restart of your student loan payments.
What this means for your student loans
Here’s what that means for your student loans. As student borrowers wait for more clarity on student loan forgiveness and the student loan payment pause, the Biden administration isn’t rushing to provide an answer. The White House has denied that Biden has decided to forgive $10,000 in student loans, saying the president has yet to decide. Biden also said he would not forgive $50,000 in student loans. However, there could be renewed pressure from progressive Democrats for Biden to reconsider a $50,000 student loan forgiveness. Cardona did not commit to extending the student loan pause, but neither did he deny that student loan repayments will resume from September 1, 2022, as currently scheduled. This leaves student borrowers in student loan uncertainty until the Department of Education provides more details on the next steps for student loan repayment. Biden canceled $25 billion in student loans and extended the student loan payment break four times. Biden could announce his decision on a broad student loan forgiveness later this summer, which would coincide with the end of the student loan payment break. If you have student loans, you should prepare as if your student loan payments would start again after September 1. The best way to prepare for paying off your student loan is to learn all the ways to pay off your student loans faster. Here are some popular ways to save money and conquer student loan debt: