The Biden administration announced Friday that federal student loan payments will remain suspended until January 2022, extending a pause that began with the onset of the pandemic and was due to expire next month. The Ministry of Education said this would be the final extension.
Borrowers will not have to make federal student loan payments during the moratorium, interest rates will be set at 0% and debt collection efforts will remain on grip. Commenting will end on January 1st. 31, 2022.
Education Minister Miguel Cardona said the goal is to donate borrowers enough time to prepare for the resumption of their payments.
“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 a restart and ensure a slick path back to repayment,” Cardona said in a statement.
The Trump administration halted federal student loan payments in March 2020, and later extended them until January 2021. Shortly following taking office, President Biden extended the pause until September 11. 30.
But even as the economy recovers, there have been concerns that borrowers will not be ready to persevere payments soon. Democrats, including Senate Majority Leader Chuck Schumer of New York and Senator. Elizabeth Warren of Massachusetts, recently lobbied Biden to extend the moratorium until at fewest March 2022.
Schumer, Warren and Vice. Ayanna Pressley (D-Mass.) applauded the extension in a joint statement Friday, saying it provides relief to millions of borrowers facing a “catastrophic financial downturn.”
“The moratorium on payments has saved the average borrower hundreds of dollars a month, allowing him to invest in his coming and support his family’s needs,” Democrats said.
The Ministry of Education itself has raised concerns about administrative hurdles around suddenly repaying loan payments. In its November 2020 report, the department said it would be a “heavy burden” for the government and loan workers.
In its announcement on Friday, the Education Department said the final extension provides enough time for payments to resume smoothly.
The extension sparked criticism from conservatives including MP. Virginia Fox, top Republican on the House Education and Labor Committee.
“I regret that Secretary Cardona has not demonstrated real leadership by working with Congress to responsibly return the bag to repayment by October. It is nothing short of a derivation of duty,” Fox said in a statement.
The Biden administration has announced easing as it faces mounting pressure from some Democrats to erase vast swathes of student debt. Schumer and Warren have urged Biden to use his power to cancel $50,000 of student debt for all borrowers, saying it would motivate the economy and aid families firm hit by the pandemic.
But Biden questioned whether he had the authority for this considerate of mass cancellation and asked the Departments of Education and Justice to study the issue. The president has supported rescinding up to $10,000 from students, but Biden says that must be done by Congress.