The Biden administration on Wednesday extended a moratorium on student loans that allowed tens of millions of Americans to defer paying their debts during the pandemic.
As part of this action, payments on federal student loans will remain suspended until May 1. Interest rates will remain at 0% during this period and debt collection efforts will be suspended. These measures have been in place since the start of the pandemic, but were due to expire on January 31.
President Joe Biden has said financial recovery from the pandemic will take longer than employment resumption, especially for those with student loans.
“We know that millions of student loan borrowers are still facing the impacts of the pandemic and need more time to resume payments,” he said in a statement, adding that he was an issue that he and the vice president both “care deeply about.”
The omicron variant of COVID-19 that has swept the United States with fury has given new urgency to the question of whether the moratorium will be extended. Administration officials initially said they expected the January extension to be the last. But even as the economy improves, some fear borrowers may not be ready to restart their payments. Once the moratorium is over, those who were already in arrears could have their salaries and benefits withdrawn as part of debt collection efforts.
The policy applies to more than 36 million Americans who have student loans held by the federal government. Their collective debt stands at more than $ 1.37 trillion, according to the latest data from the Department of Education. About a third of borrowers are in default or in default and the average monthly payment is $ 400 per month. Officials said the hiatus was also helping around 5 million other borrowers currently in school who were not yet repaying their loans but were accumulating interest.
Education Secretary Miguel Cardona said in a statement that the extension would allow repayment plans tailored to students’ financial needs, including an income-based repayment plan.
The continued hiatus “will provide critical relief to borrowers who continue to face financial hardship as a result of the pandemic, and allow our administration to assess the impacts of omicron on student borrowers,” Cardona said.
The Trump administration initially suspended federal student loan payments in March 2020, then extended them until January 2021. Biden has now decided to sue them twice, and the Department of Education has expressed its concerns about the effects of a sudden restart in payments, both for students and administratively within the department.
The extension of the moratorium on loans comes as a decision to completely erase large swathes of student debt remains on the table.
Some Democrats are pushing for massive debt relief. But Biden wondered if he had the authority for this type of mass annulment, and legal experts differ on this. Earlier this year, Biden asked the Education and Justice Departments to look into the matter. Authorities said the work was still underway.
Biden has previously said he supports canceling student debt up to $ 10,000, but argued it should be done by Congress.
The extension was greeted with relief by advocates for the students, who pushed for a more permanent solution.
“We can finally catch our breath knowing that student loan payments will be suspended again,” said Wisdom Cole, National Director of NAACP Youth & College.
But real relief would come only with the cancellation of student loan debt, Cole said.
“To provide financial relief during omicron, write off student debt,” he said. “To boost the economy, write off student debt. To close the racial wealth gap, write off student debt.”
Meanwhile, in October, the administration relaxed the rules for the student loan cancellation program it already had in place, dropping some of the more stringent requirements of the program launched in 2007 to steer more college graduates into the process. public service.
Biden said he is also asking all student loan borrowers to “do their part, too.” plans, explore the civil service loan forgiveness and “make sure you get vaccinated and boosted when you are eligible.”