Is Another Extension of the Student Loan Payment Pause Imminent?
Credit: Scott Eisen / Stringer / Getty Images News / Getty Images- Payments and interest accrual on federal student loans is paused through Aug. 31.
- Borrowers have not needed to make payments on these loans since March 2020.
- New media reports have sparked speculation that another extension of the moratorium will be issued.
President Joe Biden may be planning on again extending the pause on student loan payments, according to new reports.
Payments and interest accrual on federal student loans have been paused since March 2020 when Congress passed the CARES Act as the pandemic rippled through the U.S. economy. Former President Donald Trump subsequently extended the pause twice, and Biden has since extended it another four times. The most recent extension came in early April.
Monday, the Wall Street Journal reported that student loan servicers have been told not to send billing statements to borrowers as the Aug. 31 deadline for the resumption of payments looms.
That message has led to speculation among those in the industry that another extension of the moratorium will be issued.
Student loan servicers typically alert borrowers to payments 30 days in advance of their due date. With the scheduled end of the payment pause now just 35 days away, these servicers would be left with very little time to inform borrowers about the resumption of payments if Biden doesn’t issue an extension.
NBC News and Bloomberg News subsequently confirmed the Wall Street Journal’s reporting that student loan servicers had been told not to send billing statements to borrowers.
Scott Buchanan, the executive director of the Student Loan Servicing Alliance, told NBC News that President Joe Biden must decide on an extension sooner rather than later so servicers can be ready.
“If we get into August and don’t have guidance on this, I mean, we are really creating an untenable position for us and for borrowers,” Buchanan said. “We can’t turn on a dime. And I think that’s something they don’t really fully appreciate.”
Bloomberg News reported that Biden administration officials believe an extension would last through the end of 2022, or potentially until summer 2023.
When Biden extended the payment pause in early April, he said that millions of borrowers would face “significant economic hardship” if payments were to resume in May as scheduled.
A group of 176 organizations penned a letter to Biden in late June asking the president to extend the pause once again, reiterating that borrowers may not be financially prepared to restart payments. They also said that Biden shouldn’t allow payments to resume on loans that he intends to cancel.
As speculation spreads that Biden might again extend the payment pause, the Wall Street Journal reports that he has not yet decided on unilateral debt forgiveness. At the beginning of June, the President appeared to favor a plan that would cancel up to $10,000 per borrower making less than $150,000 per year.
An analysis from BestColleges found that student loan debt is over $1.75 trillion, with about $1.6 trillion being federal student loans. Approximately 43.3 million borrowers hold federal student debt.