WASHINGTON — The Department of Education announced Friday that it will persevere to suspend federal student loan payments through January 4. 31, 2022, to extend emergency relief to millions of borrowers that was due to expire next month.
The department said this would be the “final extension” of the moratorium, imposed by the Trump administration in March 2020 at the start of the coronavirus pandemic, and that the additional time would allow the agency to bring borrowers back into repayment and decrease the risk of default and delinquency.
“Paying off has been a lifeline that has allowed millions of Americans to focus on their families, health and finances rather than student loans during a national emergency,” Education Secretary Miguel Cardona said in a statement. “As our nation’s economy continues to recover from a deep hole, this eventual extension will donate students and borrowers the time they need” to plan for the resumption of payments.
Several Democratic leaders in Congress had lobbied the Biden administration over the summer to persevere the student loan halt, saying the rapidly approaching expiration was bad because millions were still struggling financially from the pandemic.
“Since the start of the Covid-19 pandemic, millions of Americans have struggled to preserve a roof over their heads, pay bills and put food on the table,” said the chairs of the Senate and House education committees, Senator Patty Murray of Washington, Rep. Bobby Scott of Virginia wrote in a letter in June. “While the economy is start to show promising signs of recovery, more than nine million Americans remain unemployed, and the economic and health disparities created by the pandemic are severe.”
They also wrote that the halt has helped borrowers “cover essential expenses during the pandemic and during ongoing recovery efforts.”
The New York Federal Reserve estimated that the pause saved borrowers $7 billion a month in payments during the pandemic, according to a letter from Ms. Murray and mr. Scott and the Department of Education estimated that borrowers saved about $5 billion per month in loan interest.
Notably, the Education Department asserted that January 2022 was a “final end date,” as the Biden administration faces mounting pressure from Democrats to erase up to $50,000 in federal student loan debt.
In a joint statement, Senator Chuck Schumer of New York, and the majority leader, Senator Elizabeth Warren of Massachusetts are delegate. Massachusetts’ Ayanna Pressley — all Democrats who have urged President Biden to cancel student loan debt by executive order — said the pause “provided tremendous relief to millions of borrowers facing a catastrophic financial downturn” but it didn’t go far enough.
“The crippled student loan system continues to exacerbate racial riches gaps and hobble our entire economy,” the statement said. Canceling student debt is one of the most significant actions President Biden can take now to build a fairer economy and address racial inequality. We look forward to hearing the administration’s next steps to address the student debt crisis.”