White House to extend pause on student loans until Aug. 31

WASHINGTON » The Biden administration plans to freeze federal student loan payments through Aug. 31, extending a moratorium that has allowed millions of Americans to postpone payments during the coronavirus pandemic, according to an administration official familiar with the White House’s decisionmaking.

Student loan payments were scheduled to resume May 1 after being halted since early in the pandemic. But following calls from Democrats in Congress, the White House plans to give borrowers additional time to prepare for payments.

The action applies to more than 43 million Americans who owe a combined $1.6 trillion in student debt held by the federal government, according to the latest data from the Education Department. That includes more than 7 million borrowers who have defaulted on student loans, meaning they are at least 270 days late on payments.

Borrowers will not be asked to make payments until after Aug. 31, and interest rates are expected to remain at 0% during that period.

The extension was first reported Tuesday by Bloomberg.

Democrats on education panels in the House and Senate recently urged President Joe Biden to extend the moratorium through the end of the year, citing continued economic upheaval.

Sen. Patty Murray said more time is needed to help Americans prepare for repayment and to rethink the government’s existing system for repaying student debt.

“It is ruining lives and holding people back,” she said in a statement last month.

“Borrowers are struggling with rising costs, struggling to get their feet back under them after public health and economic crises, and struggling with a broken student loan system — and all this is felt especially hard by borrowers of color.”

Murray called on the Biden administration to lift all borrowers out of default to provide a “fresh start.”

The decision is being made amid rising concern that large numbers of Americans would quickly fall behind if payments restarted in May. The Trump administration gave Americans the option to suspend loan payments in March 2020, and Congress made it automatic soon after. The pause was extended twice by the Trump administration and twice more under Biden.