Biden extends freeze on student loan payments to Jan. 31

Friday, August 20, 2021

The Biden administration announced Friday afternoon that it is extending the pause on federal student loan repayments until January of next year, as the delta variant of the coronavirus surges across the country.

“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,” U.S. Secretary of Education Miguel Cardona said in a statement.

The administration previously had a freeze on student loan repayment until Sept. 30, but announced it will make one last extension until Jan. 31, 2022.

Democrats welcomed the pause, but criticized the administration for not providing more relief for student loan borrowers by canceling student debt.

“While this temporary relief is welcome, it doesn’t go far enough,” Senate Majority Leader Chuck Schumer, D-N.Y.; Sen. Elizabeth Warren, D-Mass.; and Rep. Ayanna Pressley, D-Mass., said in a statement.

They renewed their calls for President Joe Biden to cancel up to $50,000 of student loan debt.

“Student debt cancellation is one of the most significant actions that President Biden can take right now to build a more just economy and address racial inequity,” they said. “We look forward to hearing the administration’s next steps to address the student debt crisis.”

However, House Education and Labor Committee Chairman Bobby Scott, D-Va., in a statement praised the administration for its extension.

“Throwing federal student loan borrowers back into loan repayment this fall would affect millions of workers and families who are just starting to get back on their feet,” he said.

“By extending this pause, the Biden-Harris Administration will help continue the momentum of our economic recovery and give student loan borrowers the time they need to boost their financial security before restarting loan repayment.”

Extending the moratorium also could create problems, however. Iowa university officials told the Iowa Capital Dispatch last month they are concerned students could default when the moratorium ends, simply because they’re not used to having a payment schedule.

“The students who have not paid since the beginning of the pandemic may be more at risk of going into default simply because they’ve gotten used to not having to make a payment,” said Tim Bakula, director of financial aid for the University of Northern Iowa. “It’s critical that we get them back on track.”

The Federal Reserve estimates that the total student loan debt in the U.S. is more than $1.7 trillion. At a February town hall in Wisconsin, an attendee asked Biden what he would do to cancel up to $50,000 in student debt. He said he “will not make that happen,” and instead proposed free community college and government forgiveness programs.