President Joe Biden extended the moratorium on federal student loans through May 1 amid nationwide spikes of COVID-19 cases driven by the Omicron variant.
Student loan borrowers have received the option to pause their monthly bills without incurring interest on their debt since March 2020 following the pandemic’s outbreak. The White House had previously maintained that the repayment pause would not last beyond the previously set Jan. 31 endpoint.
Biden said the U.S. Department of Education would work with borrowers during the next 90 days to transition back to collecting regular loan payments.
“Now, while our jobs recovery is one of the strongest ever – with nearly 6 million jobs added this year, the fewest Americans filing for unemployment in more than 50 years and overall unemployment at 4.2 percent – we know that millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments,” Biden said in a statement Wednesday.
Biden said borrowers should prepare to transition back to regular loan payments to ensure personal financial stability and to help boost the national economic recovery.
“As we are taking this action, I’m asking all student loan borrowers to do their part as well: take full advantage of the Department of Education’s resources to help you prepare for payments to resume; look at options to lower your payments through income-based repayment plans; explore public service loan forgiveness; and make sure you are vaccinated and boosted when eligible,” the statement reads.
The pause on student loan repayments will help 41 million American student loan borrowers save a total $5 billion per month, according to federal data.
An estimated 89 percent of student loan borrowers are not financially secure enough to start repaying their student loans by February 2022, according to a survey conducted by the Student Debt Crisis Center and Savi, two financial advocacy outfits.
Secretary of Education Miguel Cardona said the extension will ensure borrowers will have the resources they need to start repaying their debt by the beginning of 2022.
“This additional extension of the repayment pause will provide critical relief to borrowers who continue to face financial hardships as a result of the pandemic and will allow our Administration to assess the impacts of Omicron on student borrowers,” Cardona said in a statement.
Cardona said ED has provided almost $13 billion in relief to more than 600,000 student loan borrowers.
“Students and borrowers will always be at the center of our work at the Department, and we are committed to not only ensuring a smooth return to repayment, but also increasing accountability and stronger customer service from our loan servicers as borrowers prepare for repayment,” Cardona’s statement reads.
