Personal Finance

Stimulus bill won't extend payment pause for student loan borrowers

Key Points
  • The stimulus package won't extend the payment pause for student loan borrowers.
  • If no other action is taken, 42 million borrowers will have to resume their payments in a little over a month.
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The stimulus bill expected to be approved by Congress on Monday won't extend the freeze on payments and interest for federal student loan borrowers.

The $900 billion pandemic aid package will send $600 direct payments to Americans earning up to $75,000, extend unemployment benefits for another 11 weeks and provide hundreds of billions of dollars in aid for small businesses.

But in the final negotiations, a key provision to help student loan borrowers was left out. On the table had been extending the interest-free payment pause until April. That break is scheduled to end next month.

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The U.S. Department of Education first said in March that borrowers would be off the hook from their monthly bills until October. Then President Donald Trump signed an executive order in August that continued the break through December.

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Most recently, U.S. Department of Education Secretary Betsy DeVos announced that borrowers wouldn't have to resume their payments until after January 2021.

Although this stimulus package won't extend that reprieve, it's possible that President-elect Joe Biden can push it out by executive order when he takes office on Jan. 20, as Trump did in August. Biden has also promised to forgive some of the debt.

Higher education expert Mark Kantrowitz said the payment pause probably needs to be extended even beyond April.

"It will take longer for the economy to recover, and some segments might never recover," Kantrowitz said.

Americans were already struggling with their student loans before the pandemic hit and drove up unemployment, with more than 1 in 4 borrowers in delinquency or default. Outstanding student loan debt in the U.S. has spiraled to more than $1.7 trillion, and the average monthly bill is around $400.

Reflecting the need for the relief, the vast majority — or around 90% — of student loan borrowers have taken advantage of the government's option to pause their payments during the pandemic, data shows.

In a recent Pew survey, 6 in 10 borrowers said it would be difficult for them to start making payments again in the coming month. 

This is a developing story. Check back for updates.

Are you prepared to start making student loan payments again next month? Why or why not? Email me at

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