A Department of Education spokesman said Tuesday that the Biden administration may announce a student debt repayment pause extension later this week.
”Since day one of the Biden Administration, we’ve been hard at work delivering meaningful relief to student loan borrowers,” a spokesman for the Department of Education told CNBC on Tuesday. ”That started with an extension of the pause on federal student loan repayment until Jan. 31, 2022. Later this week, we will be announcing whether to extend the pause further.”
The pause started at the height of the COVID-19 pandemic in March 2020, giving student debt holders a break in making payments amid the pandemic and high unemployment that saw many Americans reliant on state and federal benefits to survive the various lockdowns.
Debt holders were allowed to postpone their payments without getting charged added interest during the pandemic, according to the Federal Student Aid website.
Collection efforts were also curtailed for the roughly one-third of student borrowers that are in default, according to the CNBC story.
Student debt has reached more than $1.7 trillion, and the average student borrower pays around $400 per month to repay the federal loans.
In August, the Biden administration extended the pause until the end of January 2022 to allow ”additional time” and give borrowers a ”definitive end date” so they could plan to start paying again, according to the Education Department.
“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 August, Cardona said: “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.
”It is the Department’s priority to support students and borrowers during this transition and ensure they have the resources they need to access affordable, high quality higher education.”
According to an October article in Forbes, borrowers will see their first bill in February 2022, and the Biden administration was working on the details about transitioning debtors back into regular payments.
Some of those measures could include a ”temporary 90-day grace period” in the first months in which late fees would not be imposed for overdue payments, relaxed ”re-certification” for payments determined by income, and returning defaulting borrowers back to ”good standing” status, according to the article.
Borrowers should contact their loan providers for more information before the pause ends.