Personal Finance

Biden administration extends payment pause for student loan borrowers until May 1

Key Points
  • The Biden administration is extending the payment pause and interest waiver for most federal student loan borrowers for another three months.
  • The delay to restarting the bills comes amid the omicron surge in the U.S.
Biden extends moratorium on student loans till May 1, 2022
Biden extends moratorium on student loans till May 1, 2022

Amid concerns about the new omicron variant of the Covid-19 virus, the Biden administration will extend the payment pause for federal student loan borrowers until May 1.

"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," President Joe Biden said in a statement on Wednesday.

Since March 2020, borrowers have been given the option to press the pause button on their monthly bills without interest accruing on their debt. Almost all borrowers have accepted the relief, research shows.

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The forbearance was scheduled to expire at the end of next month, on Jan. 31.

Yet Democrats and advocates have been pressuring President Biden to give the 42 million Americans with student debt more time. Another virus surge is also adding to worries about the economy and borrowers' ability to resume their payments.

Recent polling of student loan borrowers found that even among those who are fully employed by now, 89% are still not financially secure enough to restart payments.

Scott Heins, a freelance photographer in Brooklyn, New York, who owes over $20,000, said he was relieved by the news. Much of his income dried up during the pandemic.

"Little by little things are getting better," Heins, 33, said. "But it remains to be seen how much of a weight omicron has on my work."

Student debt relief for some on the way
Student debt relief for some on the way

Outstanding student loan debt in the U.S. has surpassed $1.7 trillion and burdens Americans more than credit card and auto debt. Around a third of borrowers are in delinquency or default. The average monthly bill is around $400 a month.

Sen. Elizabeth Warren, D-Mass., and Senate Majority Leader Chuck Schumer of New York applauded the president for granting borrowers more time but said they expect him to do more on debt relief.

"We continue to call on President Biden to take executive action to cancel $50,000 in student debt, which will help close the racial wealth gap for borrowers and accelerate our economic recovery," they wrote, along with Rep. Ayanna Pressley, D-Mass., in a statement.

Biden has asked the U.S. Department of Justice and the U.S. Department of Education to review his legal authority to clear the loans without Congress. The results have not been made public yet, but the president has so far expressed hesitation to make such a move.

This is breaking news. Please check back for updates.