The Biden administration on Wednesday announced the extension of a student loan moratorium – and will allow millions of Americans to continue putting off debt payments until May 1.
The moratorium had previously been set to expire Jan 31.
Under the action, interest rates will remain at 0% until the moratorium ends, and debt collection efforts will be suspended, according to NBC Washington.
“We know that millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments,” said Biden in a statement, adding that the financial recovery from the pandemic will take longer than job recovery, particularly for those with student debt.
The omicron variant of COVID-19 that has swept through the U.S. with a fury has lent a new urgency to the question over whether the moratorium would be extended. Administration officials had initially said they expected the January extension to be the last. But even as the economy improves, there are concerns that borrowers are not ready to start payments again. Once the moratorium ends, those who were already behind on payments could have wages and benefits taken away as part of debt collection efforts. -NBC Washington
The moratorium applies to some 36 million Americans who have student loans held by the federal government, totaling a collective $1.37 trillion according to the latest data from the Department of Education. Around 1/3 of borrowers are in default or delinquency, while the average payment stands around $400 per month.
According to Education Secretary Miguel Cardona, the extension will allow for repayment plans that are the best fit for a borrower’s situation – including an income-driven repayment plan.
The ongoing pause “will provide critical relief to borrowers who continue to face financial hardships as a result of the pandemic, and will allow our administration to assess the impacts of omicron on student borrowers,” said Cardona.
Federal student loan payments were originally suspended by the Trump administration in March 2020 and extended through January 2021. Since then, the Biden administration has continued it twice, while the Education Department has raised concerns over forcing borrowers to quickly resume payments.
Which is strange, considering Biden’s recent comments about how robust the economy has been doing.
Some Democrats are pushing for mass forgiveness of debt. But Biden has questioned whether he has the authority for that kind of mass cancellation, and legal scholars differ on that. Earlier this year, Biden asked the Education and Justice departments to study the issue. Officials have said that work is still underway.
Biden has previously said he supports canceling up to $10,000 in student debt, but he has argued it should be done by Congress.
Meanwhile, in October, the administrationrelaxed the rules for the student loan forgiveness program it has in place already, ditching some of the toughest requirements around the program that was launched in 2007 to steer more college graduates into public service. -NBC Washington.
Warren/Schumer/Pressley: We’re pleased the Biden administration has heeded our call to extend the pause on student loan payments…We continue to call on President Biden to take executive action to cancel $50,000 in student debt
— Chad Pergram (@ChadPergram) December 22, 2021
It’s never enough for some people when taxpayer money is on the line…