Suspension of student loan payments: what the extension means for borrowers



The Biden administration is extending the hiatus on payments and interest on federal student loans until early 2022.

The education ministry said it will maintain the moratorium, which the administration first extended earlier this year and is suspending loan payments, accrued interest and collections on overdue loans. The break was due to expire at the end of September 2021.

Here are the details on the extension, who will benefit from it, and what lies ahead regarding student debt legislation.

When will the payment break end?

The payment break has been extended until January 31, 2022.

What types of loans are eligible?

Only federal student loans are eligible for the payment break extension.

This means all loans held by the US Department of Education, including Stafford, Grad PLUS, and consolidation loans. Most of the loans from the Federal Family Education Loan (FFEL), which was discontinued in 2010, now belong to private lenders and are therefore not eligible. However, loans in arrears under the FFEL program have been made eligible for suspension of payments and interest, says Mark Kantrowitz, student loan expert and author of “How to Appeal for More College Financial Aid.”

Over 20 million borrowers currently have their loans on hold. Before the pandemic, some three million borrowers were on hold, according to research by Kantrowitz.

Will it be extended further?

Loan repayments and accrued interest have been suspended for borrowers with federal student loans since March 13, 2020. It has been extended once until the end of 2020, and then extended again by President Biden by decision of the ‘executive until September 30, 2021.

However, the Education Ministry said this latest extension, until Jan.31, would be the last for the payment and interest break.

Can I suspend private loans?

No, the payment break only applies to federal loans, not private loans. However, most private lenders have offered some form of pandemic forbearance on demand, which lasts for up to 90 days, Kantrowitz said.

What should I do by January?

Loan experts say borrowers should use the time needed to prepare for the restart of payments.

If you’ve moved or will have moved by that date, for example, you need to make sure your loan officer has your current contact details so that you don’t miss any important statements or notifications, says Kantrowitz.


What are your most pressing questions about student loan cancellation? Join the conversation below.

“And so you might end up missing those payments because, well, they sent it to your last known address and it won’t be their fault,” says Kantrowitz.

Consider changing your plan to reflect your current economic situation, says Kristin Blagg, senior research associate at the Center on Education Data and Policy at the Urban Institute. According to Ms. Blagg, the share of borrowers who cut their monthly payments has increased significantly from 38.2% in February 2020 to 42.6% in August 2020, either by signing up for an income-based repayment program, or by recertifying their income status.

“Be forward-thinking about what makes sense to you in terms of resuming payments,” such as asking for an income-based repayment plan, says Blagg.

Tuition fees at US public universities have nearly tripled since 1990. With President Biden seeking to ease the burden on some students, experts explain how federal financial aid programs can actually help drive up costs. Photo: History blocks

How can I check if my loans are eligible? Do I have to do anything to register?

To verify your eligibility, log into your dashboard on The loan suspension program is automatic and applied to all loans held by the US Department of Education, Kantrowitz said.

I am in a loan repayment program. Will the extension apply to me?

Yes. As part of the initial break, those potential payments counted toward your loan forgiveness, and that benefit continues through the extension, says Kantrowitz.

For example, borrowers who are enrolled in the federal government’s civil service loan forgiveness program, which requires 120 installments, will have accumulated a total of 23 remitted monthly installments by the end of the break. Those months would also benefit borrowers enrolled in an income-based repayment plan, Kantrowitz adds.

Is there a chance that my loans will be canceled?

President Biden has so far resisted calls from Democrats, including Senator Elizabeth Warren of Massachusetts and Senate Majority Leader Chuck Schumer of New York, to use executive power to write off $ 50,000 in student loan debt. for each borrower.

Instead, Biden called on Congress to pass legislation to write off $ 10,000 in individual student loans, which would prove difficult due to lack of Republican support. An official previously told the Wall Street Journal that lawyers for the administration were looking at whether Mr Biden had the power to write off debt through executive action.

Meanwhile, Kantrowitz says borrowers shouldn’t take any action that assumes their student loans will be canceled. But he says they also shouldn’t take any action that would prevent them from qualifying for forgiveness.

For example, if you have federal loans, think twice before refinancing them to private loans. “There is a good chance that private loans will not be eligible,” says Kantrowitz.

Write to JJ McCorvey at [email protected]

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