Will President Biden extend the moratorium on student loan payments? Borrowers were left wondering as the deadline approached
The moratorium on federal student loan payments is set to expire at the end of this month, but despite the looming deadline, millions of Americans have no guidance on whether those payments will resume for the first time in more than two years.
Federal student loan payments have been suspended for about 40 million Americans since the start of the coronavirus pandemic. Interest on these loans has also been set at zero percent for the duration of the moratorium.
Most recently, the Biden administration in April extended the pause until August 31. At the time, the White House said the president would make a decision on whether to cancel student loan debt before the moratorium ends or extend it.
“It’s an unjustifiable mistake to add more uncertainty to the lives of student loan borrowers at a time when I feel like that word defines so much of our experience as workers, as consumers,” said Cody Hounanian of the Student Debt Crisis Center. .
Student Loan Servicer Alliance Executive Director Scott Buchanan said the Department of Education has told student loan servicers to stop communicating with borrowers about when payments will resume at this time.
Buchanan called the lack of information from the government since Monday “extremely problematic.” With repayments still expected to start in September, he said, unless there was a major policy change, the government should have let them start approaching borrowers to help with the transition weeks ago.
When the payment freeze first began under the CARES Act in 2020, borrowers had to receive six notices before payments could resume. It is unclear whether this is still the case.
On Thursday, more than 100 Democratic lawmakers are urging the administration to extend the student loan moratorium. In a letter sent to the president and Education Secretary Miguel Cardona, the lawmakers said borrowers are facing numerous financial issues across the country and that administration actions are underway.
In a statement to CBS News, a Department of Education spokesperson said they will continue to assess its impact Pandemic covid-19 and the economy to borrowers and will contact them directly about the end of the moratorium when a decision is made.
Even if the moratorium ends at the end of the month, that doesn’t mean millions of borrowers will immediately have payments on Sept. 1. Once the moratorium ends, borrowers will receive a billing statement or other notice at least 21 days before the next payment is due, according to the Federal Student Aid Office.
While the push to extend the moratorium continues, questions remain about whether the Biden administration will move to cancel student loan debt more broadly. A White House official said Monday that the administration “continues to evaluate options for cancellation and no decision has been made.”
Last month, President Biden said he would make a decision on student loans by the end of August. In April, he said there would be answers on student loan forgiveness in the “next couple of weeks.” At the time, Biden confirmed that he was considering canceling $10,000 in student loan debt but barred $50,000 cancellation per borrower, which some Democrats pushed for.
Even factoring in the student loan moratorium, the Department of Education estimated that it has saved borrowers $5 billion a month. That amounts to about $150 billion from when the pandemic began until the end of August.
While the Biden administration continues to consider broader student loan debt forgiveness, it has already approved more than $26 billion in targeted student loan forgiveness for more than 1.3 million borrowers through executive actions, including about $8 billion for those defrauded by the schools. nearly $9 billion for borrowers with disabilities. more than $8 billion through the Public Service Loan Forgiveness Program. and over $1 billion for those who closed schools.