The Biden administration has extended the federal student loan forbearance period until May 1, 2022, as the omicron variant of the coronavirus is spreading rapidly across the country, according to the White House. This gives borrowers an additional 90 days during which payments are suspended and interest does not accrue on their student loan debt.
“Now, as our employment recovery is one of the strongest ever … we know that millions of student loan borrowers still face the impacts of the pandemic and need more time before to resume payments, “President Joe Biden said in a statement Wednesday.
While Biden has been hesitant to delay paying off the student loan beyond the original February 1 deadline, his administration has reversed its position after repeated calls from prominent Democrats who “strongly” urged the president to act.
A group of progressives – Senate Majority Chuck Schumer, Senator Elizabeth Warren and Representative Ayanna Pressley – have been particularly outspoken in pressuring the President to extend the student loan payment hiatus.
“Extending the break will help millions of Americans make ends meet, especially as we overcome the Omicron variant,” Democratic lawmakers wrote in a statement applauding the extension.
BIDEN WANTS CONGRESS STUDENT LOAN FORGIVENESS, BUT LEGISLATORS INTEREST HIM TO USE EXECUTIVE ACTION
Over the next few months, the Department of Education “will continue to work with borrowers to ensure they have the support they need to make a smooth transition to repayment and promote economic stability for their own. households and for our country, ”Biden said.
Borrowers can use this interest-free period to pay off the principal balance of their loans, saving them money on interest and paying off debt faster. Yet a recent survey found that 89% of fully employed student loan borrowers are not financially ready to resume their payments.
If you’re one of the overwhelming majority, consider lowering your monthly student loan payments by refinancing when interest rates are at record highs. Keep in mind that refinancing your federal loans into a private student loan will make you ineligible for government benefits such as forbearance, income-tested repayment, and some student loan cancellation programs.
You can compare student loan refinance offers from several private lenders both on Credible for free and without impacting your credit score. This way, you can find the lowest possible rate for your financial situation.
Have a finance-related question, but you don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.