Biden extends student loan payment pause

Administration officials say due dates will return in February

The Biden administration on Friday issued what it said will be the final extension to a student loan moratorium that has allowed millions of Americans to put off debt payments during the pandemic.

Under the action, payments on federal student loans will remain paused through Jan. 31. Interest rates will remain at 0% during that period and debt collection efforts will be suspended. Those measures have been in place since early in the pandemic but were set to expire Sept. 30.

In announcing the decision, President Joe Biden said the economy is recovering “at a record rate.” But he said the road to recovery will be longer for some Americans, especially those with student loans.

“This will give the Department of Education and borrowers more time and more certainty as they prepare to restart student loan payments,” Biden said in a statement. “It will also ensure a smoother transition that minimizes loan defaults and delinquencies that hurt families and undermine our economic recovery.”

The policy applies to more than 36 million Americans who have student loans that are held by the federal government. Their collective debt totals more than $1.3 trillion, according to the latest Education Department data.

Questions about the moratorium had been swirling in recent weeks as its expiration date approached. Even as the economy improves, there have been concerns that borrowers are not ready to start payments again. Once the moratorium ends, those who were already behind on payments could have wages and benefits taken away as part of debt collection efforts.

Several Democrats, including Senate Majority Leader Chuck Schumer, N.Y., and Sen. Elizabeth Warren, Mass., urged Biden to extend the moratorium through at least March 2022. In a June letter, they said restarting payments now would “drag down the pace of our economic recovery.”

Schumer, Warren and Rep. Ayanna Pressley, DMass., applauded the extension in a joint statement Friday, saying it provides relief to millions of borrowers facing a “disastrous financial cliff.”

“The payment pause has saved the average borrower hundreds of dollars per month, allowing them to invest in their futures and support their families’ needs,” the Democrats said.

The Trump administration initially suspended federal student loan payments in March 2020 and later extended it through January 2021. Biden moved to continue it through Sept. 30 soon after taking office.