WASHINGTON — According to the Associated Press, President Joe Biden intends to extend the moratorium on federal student loan payments until August 31, citing a federal official. Student debt limbo will last another three months for tens of millions of Americans.
This will be the seventh extension since the pause in March 2020. Inflation is rising, and gas prices are skyrocketing due to Russia's invasion of Ukraine. Meanwhile, the nation's $1.7 trillion student loan debt portfolio grows, with no clear path for the indebted.
The freeze saves 41 million borrowers about $5 billion per month, according to previous reports.
Though borrowers will likely appreciate the extra leeway, many have grown frustrated with the ongoing extensions without a plan for widespread forgiveness. Both conservative and liberal politicians are expected to condemn the actions of the Biden administration.
Some Democratic lawmakers, including Senate Minority Leader Chuck Schumer and Massachusetts Senator Elizabeth Warren, have urged Biden to use his executive authority to cancel up to $50,000 in student loan debt per borrower.
As recently as March 31, dozens of Democratic lawmakers wrote to President Obama, urging him to extend the moratorium until the end of the year and "provide meaningful student debt cancellation."
The extension will give borrowers more time to plan for payment resumption, lowering the risk of delinquency and default after the restart. Throughout the extension, the Department will continue to assess the financial impacts of the pandemic on student loan borrowers and plan for a smooth transition back into repayment.
This includes giving all borrowers with paused loans a "fresh start" on repayment by removing the effects of delinquency and default and allowing them to re enter repayment in good standing.
Also read: 5 ways to repay your student loan fast
In addition, the Department will continue to provide loan relief, including to borrowers who have been defrauded by their institutions and those who are eligible for relief through the Public Service Loan Forgiveness programme.
“The Department of Education is committed to ensuring that student loan borrowers have a smooth transition back to repayment,” said U.S. Secretary of Education Miguel Cardona. “This additional extension will allow borrowers to gain more financial security as the economy continues to improve and as the nation continues to recover from the COVID-19 pandemic.
It remains a top priority for the Biden-Harris Administration to support students, families, and borrowers – especially those disproportionately impacted by the pandemic. During the pause, we will continue our preparations to give borrowers a fresh start and to ensure that all borrowers have access to repayment plans that meet their financial situations and needs.”
The FSA will form new partnerships to ensure that borrowers who work in government are automatically credited with progress toward forgiveness, removing the paperwork that prevents many borrowers from receiving assistance. The FSA will also continue to transfer loans to servicers who have agreed to follow new, stricter accountability rules.
Today's action is a series of steps taken by the Biden-Harris Administration to help students and borrowers, make higher education more affordable, and improve student loan servicing. Over 700,000 borrowers have received over $17 billion in targeted loan relief from the Department in just over a year. Among the actions within that are: