Will President Biden extend the pause on student loan repayments? Borrowers wonder as maturity approaches
The pause on federal student loan payments is set to expire at the end of this month, but despite the looming deadline, millions of Americans don’t know if those payments will actually resume for the first time in more than two years.
Federal student loan payments have been suspended for about 40 million Americans since the start of the coronavirus pandemic. Interest on those loans was also set at zero percent for the duration of the pause.
More recently, the Biden administration in Apriluntil August 31. At the time, the White House said the president would make a decision on whether to forgive student loan debt before the pause expired or it would be extended.
“It’s a direct mistake to add more uncertainty to the lives of student borrowers at a time when I feel like that word defines a lot of our experience as workers, as consumers” , said Cody Hounanian of the Student Debt Crisis Center. .
Student Loan Servicing Alliance executive director Scott Buchanan said the Department for Education has told student loan officers to suspend communications with borrowers about when payments will resume immediately.
Buchanan called the lack of an update from the government on Monday “extremely problematic.” With repayments still expected to resume in September, he said, unless there was a major policy change, the government should have let them start reaching out to borrowers to help with the transition there. weeks away.
When the payment pause was first initiated under the CARES Act in 2020, borrowers had to receive six notifications before payments resumed. It is not clear if this still applies.
On Thursday, more than 100 Democratic lawmakers are urging the administration to extend the student loan payment break. In a letter sent to President and Secretary of Education Miguel Cardona, lawmakers said borrowers are facing many economic problems across the country and administrative measures are underway.
In a statement to CBS News, a spokesperson for the Department of Education said it would continue to assess the impact of theand economy on borrowers and will communicate directly with them on the end of the payment break when a decision is made.
Even if the pause expires at the end of the month, that doesn’t mean millions of borrowers will immediately have payments due on September 1. Once the break is over, borrowers will receive a billing statement or other notification at least 21 days before their next payment is due, according to the federal student aid office.
As the push to extend the pause continues, questions remain about whether the Biden administration will decide to write off student loan debt more broadly. A White House official said Monday that the administration “continues to evaluate cancellation options and no decision has been made.”
Last month, President Biden said he would make a decision on student loans by the end of August. In April, he said there would be answers on student loan forgiveness in the “coming weeks”. At the time, Biden confirmed he wasin student loan debt, but per borrower, which some Democrats have been calling for.
Even taking into account the student loan payment suspension, the Department of Education estimated that it saved borrowers $5 billion a month. That’s about $150 billion from the start of the pandemic through the end of August.
As the Biden administration continues to consider broader student debt cancellation, it has already approved more than $26 billion in targeted student loan cancellation for more than 1.3 million borrowers through executive action, including about $8 billion for those defrauded by schools; nearly $9 billion for borrowers with disabilities; more than $8 billion through the Civil Service Loan Cancellation Program; and more than $1 billion for those whose schools have closed.