Biden Administration Extends Student Loan Repayment Pause
WASHINGTON – The Department of Education announced Friday that it will maintain a moratorium on federal student loan payments until Jan.31, 2022, extending emergency relief for millions of borrowers that were due to expire next month.
The department said it would be the “final extension” of the break, which the Trump administration instituted in March 2020 at the start of the coronavirus pandemic, and that the additional time would allow the agency to postpone borrowers in repayment condition and reduce the risk of default and delinquency.
“The payment hiatus has been a lifeline that has allowed millions of Americans to focus on their families, health and finances rather than student loans during the national emergency,” the secretary said. Education, Miguel Cardona, in a statement. “As our country’s economy continues to recover from a deep hole, this latest extension will give students and borrowers the time they need” to plan for resuming payments.
Several Democratic leaders in Congress had urged the Biden administration over the summer to continue the student loan hiatus, saying the rapidly approaching expiration was inappropriate given that millions of people still suffered financial hardship because of the pandemic.
“Since the start of the Covid-19 pandemic, millions of Americans have struggled to keep a roof over their heads, pay their bills and put food on the table,” the Americans said. Chairs of the Senate and House education committees, Senator Patty Murray of Washington and Representative Bobby Scott of Virginia, wrote in a June letter. “As the economy has started to show promising signs of recovery, more than nine million Americans remain out of work, and the economic and health disparities created by the pandemic are severe.”
They also wrote that the break had helped borrowers “cover essential expenses during the pandemic and during ongoing recovery efforts.”
The Federal Reserve Bank of New York estimated that the hiatus saved borrowers $ 7 billion a month in payments during the pandemic, according to the letter from Ms Murray and Mr Scott, and the Department of Education has estimated that borrowers saved around $ 5 billion per month. on loan interest.
Notably, the Department of Education pointed out that January 2022 was a “definitive end date” as the Biden administration faces increasing pressure from Democrats to write off up to $ 50,000 in federal loan debt. students.
In a joint statement, Senator Chuck Schumer of New York, Majority Leader Senator Elizabeth Warren of Massachusetts and Representative Ayanna Pressley of Massachusetts – all Democrats who have urged President Biden to write off student loan debt by executive order – said the hiatus “has brought tremendous relief to millions of borrowers facing a dire financial cliff” but no did not go far enough.
“Our broken student loan system continues to exacerbate racial wealth gaps and dampen our entire economy,” the statement said. “Canceling student debt is one of the most important steps President Biden can take right now to build a fairer economy and tackle racial inequality. We look forward to hearing the administration’s next steps in addressing the student debt crisis.
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