Washington, Dec. 23 (BNA): The Biden administration on Wednesday extended a student loan deferral that has allowed tens of millions of Americans to defer debt payments during the pandemic.
Under the measure, federal student loan payments will remain on hold until May 1. Interest rates will remain at 0% during that period, and debt collection efforts will be suspended.
These measures have been in place since early in the pandemic, but were due to expire on January 31.
President Joe Biden said the financial recovery from the pandemic will take longer than restoring jobs, especially for those with student loans.
“We know that millions of student loan borrowers are still dealing with the effects of the pandemic and need more time before payments can resume,” he said in a statement, adding that it was an issue he and the vice president cared deeply about. “
The omicron variant of COVID-19 that has furiously swept the United States has given new urgency to the question of whether to extend the moratorium. Administration officials had initially said they expected the extension in January to be the last. But even as the economy improves, there are concerns that borrowers are not ready to start payments again. The Associated Press reports that once the moratorium ends, those who are already overdue can get paid and benefits as part of debt collection efforts.
The policy applies to the more than 36 million Americans who have student loans owned by the federal government. Its collective debt totals more than $1.37 trillion, according to the latest Department of Education data. About a third of borrowers are in default or in arrears and the average monthly payment is $400 per month. The suspension also helps about 5 million other borrowers in the school currently who have not yet paid their loans but are accruing interest, officials said.
Education Minister Miguel Cardona said in a statement that the extension will allow for repayment plans that respond to students’ financial needs, including an income-driven repayment plan.
The ongoing pause “will provide critical relief to borrowers who continue to experience financial hardship as a result of the pandemic, and will allow our administration to assess the effects of omicron on student borrowers,” Cardona said.
The Trump administration initially halted federal student loan payments in March 2020 and later extended them through January 2021. Biden has now moved to continue doing so twice, and the Education Department has raised concerns about the effects of a sudden restart of payments, both for students and administratively within the state. Section, sections.
The loan deferral extension comes as the decision on erasing large portions of student debt is still on the table.
Some Democrats are calling for collective debt relief. But Biden has questioned whether he has the authority over this type of mass repeal, and legal scholars disagree on this. Earlier this year, Biden asked the Departments of Education and Justice to study the issue. Officials said the work was still in progress.
Biden has previously said he supports canceling up to $10,000 of student debt, but has said it should be done by Congress.
The extension was met with relief by student advocates, who pushed for a permanent solution.
“We can finally breathe when we know student loan payments will be on hold again,” said Wisdom Cole, director of the NAACP Youth and NAACP College.
Real relief, Cole said, will only come from canceling student loan debt.
“To provide financial relief during omicron, cancel student debt,” he said. To boost the economy, cancel student debt. To address the racial wealth gap, cancel student debt.”
Meanwhile, in October, the administration relaxed rules for a student loan forgiveness program already in place, dropping some of the toughest requirements around the program launched in 2007 to direct more college graduates into public service.
Biden said he was also asking all student borrowers to “do their part, too.” He said they should take full advantage of Department of Education resources as they prepare to resume payments, consider options to reduce payments through income-based payment plans, explore public service loan forgiveness, and “make sure you receive and boost your vaccinations when you qualify.”
FKN