WASHINGTON (AP) — The Biden administration on Wednesday extended a student loan moratorium that has allowed millions of Americans to put off debt payments during the pandemic.

The action will mean that federal student loan payments are halted until May 1st. The interest rates on federal student loans will continue to be at 0% for the duration of this action, while debt collection efforts are suspended. These measures were in effect since the beginning of the pandemic but are due to expire on January 31.

President Joe BidenFinancial recovery will be slower than job recovery due to the pandemic, particularly for students with student loans.

“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,” he said in a statement.

The omicron variant of COVID-19This fury, which has now swept across the U.S., has added urgency to the issue of whether or not the moratorium would ever be extended. Initial statements by administration officials indicated that they believed the January extension would be the final. It is possible that the economy will improve, but there are still concerns about borrowers not being ready to begin payments. As part of the debt collection effort, wages and benefits could be taken from borrowers who are already in default.

It applies to student loans held by federal governments that exceed 36 million Americans. Their collective debt totals more than $1.37 trillionThe latest Education Department data shows that this figure is approximately 65%. Around a third are in default, or delinquent. The average monthly payment for a borrower is $400.

Miguel Cardona, Education Secretary, stated in a statement that this extension would allow repayment plans to be tailored to students’ financial needs. This includes an income-driven repayment program.

The continued 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.

Trump’s administration suspended student loan payments for federal students in March 2020. Then, it extended the program through January 2021. Biden now wants to extend it twice more. However, the Education Department has raised concern over the effect of suddenly restarting payments for both students and staff.

It is possible to extend the loan moratorium, but it remains open for discussion whether large student loans should be wiped out completely.

Some Democratsthey are calling for the mass cancellation of debt. Biden, however, has raised questions about whether he is authorized to cancel mass debt forgiveness. Legal scholars disagree on this point. Biden requested that the Education and Justice departments study the topic earlier in the year. Officials claim that this work is ongoing.

Biden stated previously that he would support cancelling up to $10,000 of student debt. However, he has repeatedly argued that Congress should do it.

Meanwhile, in October, the administration It has relaxed its rules regarding the student loan forgiveness program, removing some of the most stringent requirements. This program was created in 2007 in order to attract more college graduates to public service.

Biden said that he was also asking all student loan borrowers to “do their part as well.” He said they should take full advantage of Education Department resources as they prepare for payments to resume, look at options to lower payments through income-based repayment plans, explore public service loan forgiveness, and make sure you are vaccinated and boosted when eligible.”

Source: HuffPost.com.

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