WASHINGTON – President Joe Biden’s administration will extend the pause on federal student loan payments one last time, until Jan. 31, for a total of almost two years’ reprieve for borrowers.
“The Department believes this additional time and a definitive end date will allow borrowers to plan for the resumption of payments and reduce the risk of delinquency and defaults after restart,” the Department of Education said Friday in a statement.
Since the pandemic first struck, millions of student loan borrowers have been spared the obligation of paying on their accounts. The payment freeze had been scheduled to expire Sept. 30. It also included a 0% interest rate on loans, and the government had directed loan servicers to pause collection attempts.
Collecting on the nation’s $1.6 trillion student loan bills is already a daunting task during normal times. Expecting borrowers to restart payments after they have been paused for nearly two years will be an even more difficult challenge. And the departure of two companies that had been running the government’s loan programs further complicates matters.
Lawmakers and borrower advocates had said these colliding incidents warranted another extension of the federal student loan payment pause. Borrowers also wanted more time. In a survey conducted on behalf of the Pew Charitable Trusts, nearly two-thirds of borrowers said it would be difficult to start payments again if the moratorium lifted at September’s end.
Those with student loan debt have been through this limbo many times. Former President Donald Trump first suspended payments on federal loans at the start of the pandemic in March 2020. At the time, the suspension was set to last just two months, but the administration extended it multiple times.
Biden had also extended the pause, which is how the federal government reached the Sept. 30 end date.
Borrowers who feel ill-prepared to pay in February may be able to buy themselves more time by requesting a deferral. Additionally, the federal government offers a variety of plans that tie borrowers’ monthly payments to how much they earn.