President Joe Biden waves as he leaves Holy Spirit Catholic Church in Johns Island, S.C., after ... [+]
Time is running out for borrowers as the ongoing student loan pause nears the most recent extended deadline.
Student loan payments and interest accrual on government-held federal student loans have been frozen for over two years. The student loan pause was originally supposed to last six months under the CARES Act — enabling legislation Congress passed in March 2020 in the early weeks of the coronavirus pandemic. But the pause was subsequently extended multiple times by President Trump, and then by President Biden. Biden’s most recent extension ends on August 31, which is in just a matter of days.
As August 31 approaches, here’s what student loan borrowers should know.
A Student Loan Pause Extension Has Never Been Issued This Close to the End Date
There are only 16 days until August 31 — just over two weeks. Prior to this, there have been six extensions of the student loan pause. But all of the earlier extensions were announced at least three weeks prior to the anticipated end-date of the pause. No previous extension has been issued so close to the deadline.
So if student loan borrowers are feeling a bit anxious, that’s understandable — cutting it this close is actually unprecedented.
Signs Still Point to Another Extension of the Student Loan Pause
Despite the uncertainty, signs continue to point to Biden extending the student loan pause again. Top administration officials have declined to characterize the current extension as the “final” one (unlike for earlier extensions), and have promised borrowers plenty of advance notice prior to resuming repayment. Two weeks hardly can count as advance notice.
Furthermore, the Department of Education’s complex loan servicing system can’t just flip a switch and turn on payments. Loan servicers need advance notice, too. Last month, the Biden administration reportedly instructed loan servicers not to send out billing requests to borrowers, which many interpreted as a sign that student loan payments are not expected to resume soon.
Still, without a formal announcement, borrowers are left to speculate about whether Biden will actually extend the student loan pause again.
An Extension of the Student Loan Pause Could be Tied to a Decision on Broad Student Loan Forgiveness
Borrowers aren’t just waiting for a decision on extending the student loan pause. President Biden has also said that he will make a final decision on enacting broad student loan forgiveness via executive action by August 31, as well.
Biden administration officials had previously suggested that decisions extending the student loan pause and enacting broad student loan forgiveness could be linked. Some officials have evaluated whether restarting student loan payments could serve as an economic counterweight to broad student loan forgiveness, particularly in the context of historically high inflation. And the fact that Biden has confirmed that he’ll make a decision on broad student loan forgiveness by August 31 — the same date as the end of the payment pause — may not exactly be coincidence.
More Changes to Student Loan Relief Programs May Be Coming
Any extension of the student loan pause could be linked for ongoing efforts to reform, expand, or improve existing student loan forgiveness programs. The Limited PSLF Waiver, which the Biden administration enacted last fall to expand access to the troubled Public Service Loan Forgiveness program, is set to end on October 31. Advocates have been pushing for an extension.
Meanwhile, last month the Education Department released proposed new regulations as part of a broad overhaul of federal student loan forgiveness, discharge, and repayment programs. The Department may also release a proposed new income-driven repayment (IDR) plan soon, just as officials begin implementing the new IDR Account Adjustment, which is designed to advance borrowers’ progress towards student loan forgiveness. These reforms will not be fully implemented until 2023, however. Any further extension of the student loan pause may have to factor that in.
Borrowers Have Resources To Keep Tabs on the Student Loan Pause, Student Loan Forgiveness, and Other Relief
Navigating this unprecedented uncertainty is challenging for borrowers, but there are resources that can help borrowers stay on top of new developments:
- Education Department’s Covid relief website, including details on the student loan pause.
- Limited PSLF Waiver, which expires October 31.
- IDR Account Adjustment, which the Department will begin implementing this fall.
Further Student Loan Reading
Settlement Providing $6 Billion In Student Loan Forgiveness Clears Hurdle: 5 Key Takeaways
Did The Biden Administration Just Drop A Big Hint On Student Loan Forgiveness?
If You Went To These Schools, You May Qualify For Student Loan Forgiveness: Here’s What To Do
