US President Joe Biden plans to extend the pause on federal student loan payments through August, according to information published in Politics and the the wall street journal citing anonymous sources. An official announcement could come tomorrow (April 6).
About 37,000 borrowers have not had to repay their student loans for more than two years, under a government policy that was first instituted in March 2020 due to the coronavirus pandemic. As the US economy has recovered since then, Biden faces pressure from Democrats to extend the freeze or even cancel student loans altogether. The president has already extended the loan freeze three times, most recently in December.
How long will the student loan suspension be extended?
While an extension would give borrowers more time before they have to start repaying their debt, it falls short of the demand of nearly 100 lawmakers ask Biden (pdf) to extend the student loan freeze until at least the end of 2022 and to “provide meaningful cancellation of student debt”.
When Biden campaigned for president, he voiced support for canceling $10,000 in federal student debt per person. But given that Biden still doesn’t have enough voice to pass its social spending agenda, significant legislative action on student debt this year seems unlikely.
Most eligible borrowers took advantage of the break
Federal student loans account for the majority of student debt in the United States. Most borrowers eligible for automatic forbearance took advantage of the freeze.
According to a study released March 23 by the Federal Reserve Bank of New York, about $195 billion in student loan repayments have been forgiven since the moratorium began, with 97% of direct federal borrowers opting to put debt repayments on hold.