Joe Biden extends student loan pause through end of August

Joe Biden extends student loan pause through end of August

President Biden announced Wednesday that federal student loan repayments would be paused through Aug. 31, extending the moratorium that had been set to expire next month.

“We are still recovering from the [COVID-19] pandemic and the unprecedented economic disruption it caused,” Biden said in a statement. 

“If loan payments were to resume on schedule in May, analysis of recent data from the Federal Reserve suggests that millions of student loan borrowers would face significant economic hardship, and delinquencies and defaults could threaten Americans’ financial stability.” 

Repayments were initially paused by President Donald Trump in March 2020, at the onset of the coronavirus pandemic in the US. Wednesday’s announcement marks the third time Biden has extended the repayment moratorium. 

“We are still recovering from the pandemic," Biden acknowledged on Wednesday.
“We are still recovering from the pandemic,” Biden acknowledged on Wednesday as he spoke on the student loan pause.

Interest rates will remain at 0% until Aug. 31, as debt collection efforts for over 43 million Americans remain suspended. 

“That additional time will assist borrowers in achieving greater financial security and support the Department of Education’s efforts to continue improving student loan programs,” Biden said Wednesday. “As part of this transition, the Department of Education will offer additional flexibilities and support for all borrowers.”

“Vice President Harris and I are focused on supporting borrowers in need, and believe that this pause will provide a continued lifeline as we recover and rebuild from the pandemic,” Biden added. 

Currently the federal government holds a combined $1.6 trillion in student debt, according to the Associated Press, which cited data from the Department of Education. Approximately 7 million Americans have defaulted on their loans, defined as being at least 270 days late on payments.

Dozens of left-wing lawmakers have pressed the administration to move forward with student loan cancellation, and in January pushed for the forgiveness of up to $50,000 per borrower. 

“In light of high COVID-19 case counts and corresponding economic disruptions, restarting student loan payments without this broad cancellation would be disastrous for millions of borrowers and their families,” they wrote at the time. 

Biden extended the moratorium on student loan repayments that was set to end in May.
Biden extended the moratorium on student loan repayments that was set to end in May.

Biden has previously said he supports canceling up to $10,000, but he argued it should be done through congressional action.

Republicans and conservatives have slammed the extended moratorium, describing it as a giveaway to Democrats’ wealthy, college-educated constituency.

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