Student loan moratorium extension: how long will repayments be paused for?
White House officials suggest that President Biden is set to extend the suspension of repayments and interest on student loans debts.
The White House is preparing to announce another extension of the federal student loan repayment moratorium, according to numerous sources close to the Biden administration.
Throughout the pandemic the federal government has placed a pause on the collection of student loan repayments to ease the financial burden on Americans. It is thought that around 40 million people will directly benefit from the extension of the moratorium.
The announcement is expected to be made official on Wednesday with the student loan pause to be extended until 31 August. Previously, the moratorium was due to come to an end on 1 May.
How long has the student loan moratorium been in place for?
Back in March 2020 Congress passed the CARES Act, legislation designed to offer short-term financial relief in the face of the mounting scale of the covid-19 pandemic. This bill was responsible for the initial pause on the vast majority of student loan repayments (those related to federally-held student loans).
The moratorium not only halted the repayments, but prevented an interest being accrued and banned any collection efforts against borrowers who already owed back-payments for outstanding student loans.
Initially the provision only allowed for a six-month suspension of the repayments, but as the severity of the pandemic and the resultant economic disruption became clear the moratorium has been extended numerous times.
In related news: $2,753 monthly check in USA: who gets it and when will it arrive?
How much longer could the moratorium be extended for?
Today’s news had been expected for a number of weeks after administration officials signalled that they were likely to extend the relief further. Federal student loan servicers had been advised not to recommence sending notices to borrowers, a key step in the reintroduction of loan repayments.
Susan Rice, domestic policy adviser to the President, is thought to have played a key role in the negotiations to secure the extension.
“Since the beginning of the Administration, she has advocated for each pause on the repayment of student loans, including this most recent one,” one White House official told Politico.
A number of prominent Democrats have pushed for the moratorium to be extended beyond the expected new deadline of 31 August. Last week a group of 100 lawmakers, led by Sen. Elizabeth Warren and Majority Leader Chuck Schumer, signed a letter to the White House calling for the moratorium to be extended “until at least the end of the year.”