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Biden extends pause on student loan repayment through May 1

Biden extends pause on student loan repayment through May 1
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The payments, which were due to start on February 1, have been paused since the start of the pandemic. Biden cited the country’s ongoing Covid-19 crisis as the reason for the extension.

“Given these considerations, my administration is today extending the hold on federal student loans by an additional 90 days — through May 1, 2022 — as we manage the ongoing pandemic and further advance our economic recovery,” Biden said in a statement. “In the meantime, the Department of Education will continue to work with borrowers to ensure they have the support they need to transition smoothly to repayment and enhance economic stability for their families and our nation.”

The downturn comes less than two weeks after White House Press Secretary Jen Psaki indicated that the administration still plans to resume federal student loan payments in February, resisting pressure from some Democrats who have been calling for an extension of coronavirus pandemic relief benefits.

The potential extension was first reported by Politico.

The borrower’s balances have been effectively frozen for nearly two years, with no payments required on most federal student loans since March 2020. During this time, interest stopped increasing and bad debt collections were suspended.

Both Biden and former President Donald Trump have taken measures to extend the pause. Most recently, Biden moved the repayment date from September 30, 2021, to January 31, 2022, but the administration clarified at the time that this would be the final extension.

Some Democrats pressured Biden to offer relief

Senate Majority Leader Chuck Schumer of New York, Senator Elizabeth Warren and Representative Ayanna Pressley, both of Massachusetts, were lobbying Biden to extend the student loan moratorium and applauded the extension announcement.

“Extending the downtime will help millions of Americans make ends meet, especially as we weather the Omicron variable,” Schumer, Warren and Presley said in a statement.

But they continued to urge Biden to take further action and cancel up to $50,000 in student loan debt for each borrower.

Biden said during the presidential campaign that he would support repealing $10,000 per borrower, but he has taken no action to do so other than directing federal agencies to conduct reviews of whether he has the authority.

When asked earlier this month about the campaign pledge, Psaki said the executive branch regarding student loan forgiveness is still under review and added that the president supports Congress’ action on the issue.

“If Congress sent him a bill, he’d be happy to sign it,” she said. “They haven’t sent him a bill on that yet.”

Biden has repeatedly resisted pressure to cancel up to $50,000 per borrower since taking office — making very clear during a CNN board meeting early in the year that he does not support the idea.
Separately, since taking office, Biden’s Department of Education has made it easier for people who have been defrauded by for-profit colleges to seek debt relief. It also temporarily expanded the Public Service Loan Forgiveness Program that cancels debts owed to eligible public servants after they have made payments for 10 years.

Preparing to resume payments

“As we prepare to return to repayment in May, we will continue to provide tools and support to borrowers so that they can enter into a repayment plan that responds to their financial situation, such as an income-driven repayment plan,” Education Minister Miguel Cardona said in a statement Wednesday.

Most borrowers with federal student loans have not had to make any payments since March 2020. Direct loans as well as PLUS loans, available for graduating high school students and parents on behalf of their children, are eligible for this benefit. Some federal loans that are guaranteed by the government but not technically owned by it, known as Federal Family Education Loans, or FFEL, were not eligible. Generally, it was cashed before 2010.

The forgiveness is more important for those who work in the public sector and may be eligible for federal student loan forgiveness after 10 years. They still receive credit for those 10 years of required payments as if they kept making them during the pandemic, as long as they still work full time for their eligible employers.

Borrowers will receive a billing statement or other notice at least 21 days before repayment is due, according to the Department of Education. Those who have set up automatic payments may need to notify their loan service company that they want them to continue.

If federal student loan borrowers can no longer afford their monthly payments, they may qualify for an income-driven repayment plan. Under these plans, which are based on income and family size, the monthly payment can be as low as $0 per month. The Department of Education has more information online about restarting payment.

CNN’s Megan Vasquez contributed to this report.

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