A senior Biden administration official has indicated that the pause in outstanding student loan payments will end and payments will resume. But he did not confirm a specific timeline, leaving borrowers guessing when and if to schedule repayment.
Here’s where things stand and what borrowers can expect.
Suspension of student loan payments continues until August
For more than 26 months, payments on most federal student loans have been suspended and interest has been set at zero. Collection efforts against defaulting federal student loan borrowers have also been suspended.
This relief was originally provided through the CARES Act, which Congress passed in March 2020 in response to the Covid-19 pandemic, and it was supposed to last for six months. But President Trump and then President Biden issued a series of short-term extensions. Biden’s most recent extension is now set to end on August 31, 2022, meaning billing would resume in September.
Will the student loan payment break be extended again?
But Biden administration officials have hinted that another extension to the payment break could be coming. In response to a reporter’s question whether the president would again extend the relief beyond August 31, White House press secretary Jen Psaki told reporters in April that officials would “continue to assess “key economic indicators” including costs and inflation”, apparently leaving open the possibility of another extension. “The Department of Education will look at this and a range of factors as we get closer” to August, she said.
Last week, Education Secretary Miguel Cardona said in an interview on MSNBC’s ‘Symone’, “At some point people are going to have to start paying what they can afford” on their student loans. While that makes it clear that the payment pause won’t last forever, Cardona also declined to confirm that student loan payments will actually resume in September. He said Education Department officials were talking to the White House about “when to start paying again,” and he promised borrowers “a long on-ramp with clear information” before the resumption of billing.
The lack of commitment to a specific timeline gives the administration the option to extend the payment pause beyond August 31. But it also leaves borrowers in great uncertainty about what will ultimately happen with their student loan repayments.
Biden administration working to implement new student loan relief
One reason the Biden administration may extend the student loan payment pause beyond August is that the implementation of new student loan relief initiatives may not be complete. here there.
The Biden administration is working to implement the PSLF Limited Forgiveness Program, which dramatically expands eligibility for an essential student loan forgiveness program for public service borrowers; this program is in effect until October 31, 2022. The administration also recently announced an IDR adjustment initiative, which will bring millions of borrowers closer to student loan forgiveness through repayment programs based on income; the department has indicated that implementation of this initiative may not occur until January 2023. And the administration announced Operation Fresh Start, which will automatically remove millions of federal student loan borrowers from default – but the Biden officials did not provide many details on an expected timeline.
Given that these initiatives would not be completed until well after August, the Biden administration could very well extend the payment pause again until the fall, or beyond.
What about the general student loan forgiveness?
As uncertainty persists over the resumption of student loan repayments, the debate over general student loan relief also continues. President Biden and senior White House officials have indicated that some sort of executive action-based student loan forgiveness effort is being seriously considered, but no final decision has been made. Administration officials have repeatedly said a decision on broad student debt cancellation will be made before the student loan payment break ends — or that the payment break will be extended again.
In the MSNBC interview, Secretary Cardona continued to leave the door open to some sort of student loan forgiveness initiative, but refused to make any commitments. “I have nothing to share with you at the moment, [but] I can tell you those conversations are ongoing,” he said.
Further Reading on Student Loans
5 things student borrowers shouldn’t be doing by September
If Biden enacts a broad student loan waiver, it could look like this
Want student loan forgiveness? To qualify, borrowers may need to do this first
Who qualifies for student loan relief under Biden’s huge new income-based repayment expansion