WASHINGTON — The Biden administration has announced an extension of the moratorium on federal student loan payments until Jan. 31, 2022. The current moratorium had been scheduled to expire at the end of September.
The Department of Education said in a statement that this would be the "final extension" and that it felt that a "definitive end date" would reduce the risk of delinquency and defaults once payments restart.
A number of debt-relief organizations and some Democrats in Congress had been calling on President Joe Biden to extend the payment pause as Delta variant of the coronavirus continues to create economic uncertainty. "The payment pause has been a lifeline that allowed millions of Americans to focus on their families, health, and finances instead of student loans during the national emergency," Secretary of Education Miguel Cardona said in a statement. "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."
Congress originally enacted a federal student loan payment moratorium in March 2020 with passage of the CARES Act, which paused payments through September 2020 and kept interest rates at 0% for the roughly 42 million federal borrowers.
‘Massive Undertaking’
One analysis noted, “Consumer advocates have warned that turning federal student loan payments back on will be a massive undertaking for the Education Department and will require a significant amount of outreach from the Biden administration to make sure borrowers are aware that payments are once again due.”
The Education Department has said it will begin reaching out to borrowers in the coming days to notify them about the extension and will provide resources to plan for the payment restart.
The payment moratorium does not apply to borrowers with privately held loans.