The Biden administration on Wednesday extended a pandemic-era student loan moratorium that was set to expire on January 31, allowing millions of Americans to continue to put off debt payments until May 1.
The move keeps interest rates at 0 percent during that period and suspends debt-collection efforts — measures that were first put in place early in the Covid-19 pandemic.
The extension, which applies to more than 36 million Americans who have student loans that are held by the federal government, comes amid concerns about a surge in Covid-19 cases as the highly transmissible Omicron variant spreads in the U.S.
“We know that millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments,” President Biden said in a statement.
The collective debt of the 36 million debtors totals more than $1.37 trillion, Education Department data show. Roughly one-third of borrowers are in default or delinquency. The average monthly payment is $400.
Education Secretary Miguel Cardona said keeping the policy in place until May will allow for repayment plans responsive to the financial needs of students, such as an income-driven repayment plan.
Cardona said the pause “will provide critical relief to borrowers who continue to face financial hardships as a result of the pandemic, and will allow our administration to assess the impacts of omicron on student borrowers.”
The extension marks the second time Biden has moved to continue the policy, which was initially implemented under the Trump administration in March 2020.
When the administration extended the pause from September 2021 to January 2021, officials vowed that it would be the final extension of the relief.
At that time, Cardona called the pause a “lifeline that allowed millions of Americans to focus on their families, health and finances instead of student loans during the national emergency.”
“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 restart and ensure a smooth pathway back to repayment,” he said in August. “It is the Department’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.”
Source: National Review
