The Biden Administration has given student loan borrowers another reprieve on their repayments and collections, granting them a “final extension” until January 31, 2022.
Set to expire at the end of September, the pause will instead buy some 40 million individuals with outstanding debt and interest a further window to potentially save some money and be in a better position to start payments again next year.
“The payment pause has been a lifeline that allowed millions of Americans to focus on their families, health and finances instead of student loans during the national emergency,” said U.S. Secretary of Education Miguel Cardona. “As our nation’s economy continues to recover from a deep hole, this final extension will give students and borrowers the time they need to plan for a restart and ensure a smooth pathway back to repayment. It is the Department of Education’s priority to support students and borrowers during this transition and ensure they have the resources they need to access affordable, high-quality higher education.”
The Department plans to connect with borrowers in the coming days and weeks about their repayments and says it will work to enhance student loan servicing. The federal government already has given $1.5 billion toward borrower defense claims and has worked to discharge more $1.3 billion in loan discharges for 41,000 borrowers who received a total and permanent disability.
Still, it remains unclear, with continued job losses, a rocky economy and the ongoing threat of the pandemic, whether the majority of borrowers who haven’t been able to afford payments will start again in January. Student loan borrowers owe more than $1.7 trillion, an average of around $32,000 per borrower, according to data from the Federal Reserve.