Loan payment

Biden extends paused student loan payment for another 4 months ‘one last time’

  • Biden extended the pause on student loan payments for another four months, through Dec. 31.
  • This answered calls from advocates who feared borrowers were being forced to repay their debt too soon.
  • This was accompanied by a new $10,000 in student debt forgiveness for federal borrowers.

President Joe Biden has extended the pause on student loan payments for the fifth time during his term.

Wednesday, Biden announced on Twitter that the more than two-year federal pause on payments, with waiver of interest, will be extended again until December 31. It comes after Democratic lawmakers and advocates pushed for another extension beyond Aug. 31. $10,000 loan forgiveness for federal borrowers earning less than $125,000 a year, and advocates wanted to ensure the Department of Education had time to fully implement this relief, as well as other reforms in the student loan sector.

It was unclear whether Biden would make the decision to extend the hiatus again, given his administration’s concerns about inflation. Jared Bernstein, a member of the White House Council of Economic Advisers, previously told the New York Times that restarting payments would thwart any inflationary impact of impending student loan relief, and that Biden was taking so long with his debt decision. student to ensure that whatever he does will not add to already high inflation.

It appears Biden answered calls from many Democratic lawmakers and advocates who worried borrowers were being fired too soon in repayment. Last month, 180 organizations called on Biden to extend the payment pause, writing in a letter that they “strongly urge your administration not to threaten the financial security of people in debt as an inflation-fighting tactic.”

In late July, 107 Democratic lawmakers — including Senate Majority Leader Chuck Schumer and New York Rep. Alexandria Ocasio-Cortez — also pushed Biden to extend the recess.

“Resuming student loan payments would force millions of borrowers to choose between paying their federal student loans or putting a roof over their heads, food on the table, or paying for child care and health care. healthcare – as costs continue to rise and yet another COVID-19 variant increases hospitalizations nationwide,” they wrote in a letter.

On the other hand, Republican lawmakers won’t be happy with the news of this latest expansion. Many have criticized the cost to taxpayers of previous payment breaks, with some even introducing legislation barring Biden from extending the break and largely canceling student debt.

With the pause now extended, giving borrowers more time to prepare for another monthly bill, student loan companies have raised concerns about implementing this relief on such short notice. Scott Buchanan, executive director of the Student Loan Servicing Alliance — a group that represents federal loan officers — wrote in a letter Monday from Education Secretary Miguel Cardona that “it may not be possible to ensure that a complete and complete delay in repossession could be carried out systematically on September 1 for any borrower without incident.