Biden extends pause on student loan repayment through May 1
President Joe Biden announced Wednesday he is extending the pause on student loan payments until May 1.
The payments, which were set to restart on February 1, have been paused since the beginning of the pandemic. Biden pointed to the ongoing Covid-19 crisis in the country as the reason for the extension.
“Given these considerations, today my Administration is extending the pause on federal student loan repayments for an additional 90 days — through May 1, 2022 — as we manage the ongoing pandemic and further strengthen our economic recovery,” Biden said in a statement. “Meanwhile, the Department of Education will continue working with borrowers to ensure they have the support they need to transition smoothly back into repayment and advance economic stability for their own households and for our nation.”
The reversal comes less than two weeks after White House press secretary Jen Psaki had indicated that the administration was still planning to restart federal student loan payments in February, resisting pressure from some fellow Democrats who have been calling for an extension of coronavirus pandemic relief benefits.
The possible extension was first reported by Politico.
Borrower balances have effectively been frozen for nearly two years, with no payments required on most federal student loans since March 2020. During this time, interest has stopped adding up and collections on defaulted debt have been on hold.
Both Biden and former President Donald Trump took actions to extend the pause. Most recently, Biden moved the payment restart date from September 30, 2021, to January 31, 2022, but the administration made clear at the time that this would be the final extension.
Some Democrats have pressured Biden to extend relief
Senate Majority Leader Chuck Schumer of New York, Sen. Elizabeth Warren and Rep. Ayanna Pressley, both of Massachusetts, have been pressuring Biden to extend the student loan repayment pause and applauded the extension announcement.
“Extending the pause will help millions of Americans make ends meet, especially as we overcome the Omicron variant,” Schumer, Warren and Pressley said in a statement.
But they continued to urge Biden to take further action and cancel up to $50,000 of student loan debt per borrower.
Biden said during the presidential campaign that he would support canceling $10,000 per borrower, but has not taken action to do so beyond directing federal agencies to conduct reviews on whether he has the authority.
When asked earlier this month about that campaign pledge, Psaki said the executive authority regarding student loan forgiveness is still under review and added that the President supports congressional action on the matter.
“If Congress sends him a bill, he’s happy to sign it. They haven’t sent him a bill on that yet,” she said.
Biden has repeatedly resisted pressure to cancel up to $50,000 per borrower since taking office — making it very clear during a CNN town hall early in the year that he does not support the idea.
Separately, since taking office, Biden’s Department of Education has made it easier for people who were defrauded by for-profit colleges to seek debt relief. It has also temporarily expanded the Public Service Loan Forgiveness program that cancels outstanding debt for qualifying public service workers after they have made payments for 10 years.
Preparing for payments to resume
“As we prepare for the return to repayment in May, we will continue to provide tools and supports to borrowers so they can enter into the repayment plan that is responsive to their financial situation, such as an income-driven repayment plan,” said Education Secretary Miguel Cardona in a statement Wednesday.
Most borrowers with federal student loans have not had to make any payments since March 2020. Direct Loans as well as PLUS loans, which are available to graduate school students and parents on behalf of their children, are eligible for the benefit. Some federal loans that are guaranteed by the government but not technically held by it, known as Federal Family Education Loans, or FFEL, did not qualify. Generally, those were disbursed prior to 2010.
The relief is even more significant for those who work in the public sector and may be eligible for federal student loan forgiveness after 10 years. They are still receiving credit toward those 10 years of required payments as if they had continued to make them during the pandemic, as long as they are still working full time for qualifying employers.
Borrowers will receive a billing statement or other notice at least 21 days before their payment is due, according to the Department of Education. Those who had set up auto payments may need to notify their loan servicing company they want those to continue.
If federal student loan borrowers can no longer afford their monthly payment, they may be eligible for an income-driven repayment plan. Under those plans, which are based on income and family size, a monthly payment can be as low as $0 a month. The Department of Education has more information online about the payment restart.