Student loan payment pause extended 'one final time' by Biden administration
The U.S. Department of Education announced another extension of the pause on student loan repayment, interest and collections on Wednesday. Borrowers can now expect to resume repayment in January 2023.
Initially started by the Trump administration during the Covid-19 pandemic in March 2020, this marks the seventh repayment extension. The new end date of Dec. 31, 2022 will be the "one final time" the pause is extended, the Biden administration said in a tweet.
"While the economy continues to improve, Covid cases remain at an elevated level," said the U.S Department of Education's press office, adding that "the President has made clear that pandemic-related relief should be phased out responsibly so that people do not suffer unnecessary financial harm."
Borrowers will not need to take any action to extend their student loan repayment pause, as the moratorium will occur automatically.
"Earning a college degree or certificate should give every person in America a leg up in securing a bright future. But for too many people, student loan debt has hindered their ability to achieve their dreams," said U.S. Secretary of Education Miguel Cardona in a statement. "Today, we're delivering targeted relief that will help ensure borrowers are not placed in a worse position financially because of the pandemic and restore trust in a system that should be creating opportunity, not a debt trap."
According to the Federal Reserve Bank of New York, borrowers have saved $200 billion since the student loan moratorium started, easing the burden of having yet another bill as inflation continues to impact peoples' purchasing power.
In addition to extending the repayment pause, President Biden announced a three-part plan from the Department of Education to further target debt relief for America's "working families."
A maximum of $20,000 in debt cancellation may be available for those who received a Pell Grant in college and earn under $125,000 (individuals) or under $250,000 (married couples or heads of household). Up to $10,000 will be forgiven for borrowers who meet those income standards but did not receive a Pell Grant.
New income-driven repayment plans are also now being proposed by the Department of Education that would cap monthly payments for undergraduate loans at 5% of borrowers' discretionary income.
This is a developing story. Please check back for updates.
Check out:
Biden admin is 'talking daily' about student loan forgiveness, expects decision in 'next week or so'
Sign up now: Get smarter about your money and career with our weekly newsletter