Pause on student loan payments extended through January

Aug 6, 2021, 3:19 PM | Updated: Aug 7, 2021, 1:29 am
Education Secretary Miguel Cardona speaks during the daily briefing at the White House in Washingto...

Education Secretary Miguel Cardona speaks during the daily briefing at the White House in Washington, Thursday, Aug. 5, 2021. (AP Photo/Susan Walsh)

(AP Photo/Susan Walsh)

The Biden administration on Friday issued what it says will be the final extension to a student loan moratorium that has allowed millions of Americans to put off debt payments during the pandemic.

Under the action, payments on federal student loans will remain paused through Jan. 31, 2022. Interest rates will remain at 0% during that period, and debt collection efforts will be suspended. Those measures have been in place since early in the pandemic but were set to expire Sept. 30.

In announcing the decision, President Joe Biden said the economy is recovering “at a record rate.” But he said the road to recovery will be longer for some Americans, especially those with student loans.

“This will give the Department of Education and borrowers more time and more certainty as they prepare to restart student loan payments,” Biden said in a statement. “It will also ensure a smoother transition that minimizes loan defaults and delinquencies that hurt families and undermine our economic recovery.”

The policy applies to more than 36 million Americans who have student loans that are held by the federal government. Their collective debt totals more than $1.3 trillion, according to the latest Education Department data.

Questions about the moratorium had been swirling in recent weeks as its expiration date approached. Even as the economy improves, there have been concerns that borrowers are not ready to start payments again. Once the moratorium ends, those who were already behind on payments could have wages and benefits taken away as part of debt collection efforts.

Several Democrats, including Senate Majority Leader Chuck Schumer, N.Y., and Sen. Elizabeth Warren, Mass., urged Biden to extend the moratorium through at least March 2022. In a June letter, they said restarting payments now would “drag down the pace of our economic recovery.”

Schumer, Warren and Rep. Ayanna Pressley, D-Mass., applauded the extension in a joint statement Friday, saying it provides relief to millions of borrowers facing a “disastrous financial cliff.”

“The payment pause has saved the average borrower hundreds of dollars per month, allowing them to invest in their futures and support their families’ needs,” the Democrats said.

The Trump administration initially suspended federal student loan payments in March 2020 and later extended it through January 2021. Biden moved to continue it through Sept. 30 soon after taking office.

The Education Department itself has raised concerns about administrative hurdles around suddenly restarting loan payments. In a November 2020 report, the department said it would be a “heavy burden” to reactivate millions of loans at the same time. It warned that some borrowers would likely fall behind on their payments, “at least initially.”

On Friday , the Education Department said the final extension provides enough time to restart the process smoothly, and it gives borrowers a “definitive end date” to plan for.

“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,” Education Secretary Miguel Cardona said in a statement.

Student advocates welcomed the extension, saying it’s a victory for borrowers who have suffered financial hardship during the pandemic. But Republicans criticized the move, saying the economy has rebounded strongly enough to resume payments.

“Students and families faced immense challenges last year, but the American economy continues to recover and there is no rational excuse for continued extensions of non-payment on student loans,” said Sen. Richard Burr, the top Republican on the Senate Health, Education, Labor and Pensions Committee.

The Biden administration announced the relief as it faces mounting pressure from some Democrats to erase huge swaths of student debt. Schumer and Warren have urged Biden to use his authority to cancel $50,000 in student debt for all borrowers, saying it would jumpstart the economy and help families hit hard by the pandemic.

They repeated that call in their statement on Friday, saying debt cancellation is “one of the most significant actions that President Biden can take right now to build a more just economy and address racial inequity.”

But Biden has questioned whether he has the authority for that kind of mass cancellation, and legal scholars have come to differing conclusions. Earlier this year, Biden asked the Education and Justice departments to study the issue. Officials have said that work is still underway.

Biden has previously said he supports canceling up to $10,000 in student debt, but he has argued it should be done by Congress.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


              Education Secretary Miguel Cardona speaks during the daily briefing at the White House in Washington, Thursday, Aug. 5, 2021. (AP Photo/Susan Walsh)
            
              Education Secretary Miguel Cardona speaks during the daily briefing at the White House in Washington, Thursday, Aug. 5, 2021. (AP Photo/Susan Walsh)

AP

Maryland Gov. Larry Hogan speaks at an annual leadership meeting of the Republican Jewish Coalition...
Associated Press

Hogan to gather with supporters amid White House speculation

ANNAPOLIS, Md. (AP) — Term-limited Maryland Gov. Larry Hogan was holding fundraisers for future political activity Wednesday at events where the Republican is expected to talk about his eight years as governor, as well as plans for the future. Hogan, who leaves office in January, has positioned himself to run as a legitimate alternative to […]
7 hours ago
Associated Press

Germany seeks to boost immigration of skilled workers

BERLIN (AP) — The German government said Wednesday that it plans to ease entry rules for immigrants from outside the European Union to help meet Germany’s demand for skilled workers. Experts say Europe’s biggest economy needs about 400,000 skilled immigrants each year as the country’s ageing workforce shrinks, particularly to fill vacancies in the health […]
7 hours ago
FILE - In this Sept. 30, 2019, file photo, Seminole County Tax Collector Joel Greenberg talks to th...
Associated Press

Gaetz friend says lighter sentence deserved for cooperation

ORLANDO, Fla. (AP) — A former Florida tax collector whose arrest led to a federal investigation of U.S. Rep. Matt Gaetz learns this week how much prison time he gets on charges of sex trafficking a minor and identity theft, but not before trying to persuade a judge that his cooperation in several probes should […]
7 hours ago
FILE - Four of the cooling towers of the Dukovany nuclear power plant rise high above the natural s...
Associated Press

3 energy companies vying to build new Czech nuke reactor

PRAGUE (AP) — Three energy companies including U.S. Westinghouse, France’s EdF and Korea’s KHNP will by vying to build the Czech Republic’s newest reactor at the Dukovany nuclear power station, authorities said Wednesday, as the country strives to become more energy independent and wean itself of fossil fuels. State-controlled power company CEZ says final bids […]
7 hours ago
Associated Press

6 ways to boost your credit card rewards this holiday season

Get your wallet ready — it’s that time again with the holidays right around the corner. An estimated 91% of Americans will celebrate in some form this holiday season, a November report from the National Retail Federation shows. And for most people, celebration means spending. According to a September study by the Deloitte Center for […]
7 hours ago
This photo provided by Hyundai shows the 2022 Hyundai Tucson, a small plug-in hybrid SUV with an el...
Associated Press

Edmunds: Toyota RAV4 Prime vs. Hyundai Tucson Plug-in

Since its debut for the 2021 model year, the Toyota RAV4 Prime has served as a benchmark for what a small SUV with a plug-in hybrid powertrain can be. It’s efficient, fast and nearly as practical as a regular RAV4. But now SUV shoppers have another choice to consider: the Hyundai Tucson PHEV. It too […]
7 hours ago

Sponsored Articles

...
Children’s Cancer Network

Children’s Cancer Network celebrates cancer-fighting superheroes, raises funds during September’s Childhood Cancer Awareness Month

Jace Hyduchak was like most other kids in his kindergarten class: He loved to play basketball, dress up like his favorite superheroes and jump as high as his pint-sized body would take him on his backyard trampoline.
...
SCHWARTZ LASER EYE CENTER

Key dates for Arizona sports fans to look forward to this fall

Fall brings new beginnings in different ways for Arizona’s professional sports teams like the Cardinals and Coyotes.
...
Day & Night Air Conditioning, Heating and Plumbing

Ways to prevent clogged drains and what to do if you’re too late

While there are a variety of ways to prevent clogged drains, it's equally as important to know what to do when you're already too late.
Pause on student loan payments extended through January