Suspension of student loan payments extended until January 31, White House announces
WASHINGTON – The Biden administration announced on Friday that the moratorium on federal student loan payments would be extended until January 31, just weeks before the recess expired in late September.
In a statement, the Education Ministry said it would be the “final extension” and believes that a “final end date” will reduce the risk of default and default once payments are made. restarted.
Debt relief advocates and some Democrats had pressured President Joe Biden to extend the payment hiatus as the country navigates the economic uncertainty of the pandemic. Many also argued that it was unfair to let the moratorium expire at the end of September without giving borrowers enough time to prepare.
âThe payment break has been a lifeline that has allowed millions of Americans to focus on their families, health and finances instead of student loans during the national emergency,â the secretary said. ‘Education Miguel Cardona in a press release. “As our country’s economy continues to recover from a deep hole, this latest extension will give students and borrowers the time they need to plan for the restart and ensure a smooth return to repayment.”
The federal moratorium on student loan payments began in March 2020 when Congress passed the CARES Act, which suspended payments until September 2020 and kept interest rates at 0% for the estimated 42 million borrowers. federal governments in response to the pandemic.
Then-President Donald Trump then took executive action to extend the postponement of student loan payments until January, and Biden on his first day in office signed an executive order to continue the hiatus until January. to September 30.
Consumer advocates have warned that reactivating federal student loan payments would be a big undertaking for the Education Department and will require significant outreach from the Biden administration to ensure borrowers know that payments are due again.
The Education Ministry said it will start contacting borrowers in the coming days to notify them of the extension and provide resources to plan for the resumption of payments.
The payment moratorium does not apply to borrowers with private loans.
Supporters of student debt relief welcomed the extension, but continued to pressure Biden to take more aggressive action.
“While this temporary relief is welcome, it does not go far enough,” said Senate Majority Leader Chuck Schumer, DN.Y., Senator Elizabeth Warren, D-Mass., And Rep. Ayanna Pressley. , D-Mass., Said in a joint statement.
âWe continue to call on the administration to use its existing executive authority to cancel $ 50,000 in student debt. The cancellation of student debt is one of the most important steps President Biden can take right now to build on. a fairer economy and tackling racial inequalities, âthey added.
The White House said the Education Department was reviewing Biden’s legal authority to write off debt through executive action, but the administration was unable to provide a timeline for that review.
Biden said he didn’t think he had the power to unilaterally write off student debt, but would support Congress passing a bill to write off $ 10,000 in debt.
The Federal Reserve estimated that in the second quarter of 2021, Americans owed more than $ 1.7 trillion in student loans. Studies show that students of color are more likely to take on student debt and are disproportionately struggling to pay it off. The highest default rates are found among students who attended for-profit institutions.