Student Loan Pause Extension Increasingly Likely, But Uncertainty Remains – Forbes | Vette Leader

The national student loan payment pause is set to end in just 54 days. Biden administration officials have suggested another extension is possible.

While no final decision has yet been made, several signs point to a further extension of the payment pause. But without concrete information from the White House and the Department of Education, borrowers are left in the dark about what to expect in the coming months.

Here things are.

The last extension of the student loan pause expires on August 31st

The unprecedented statewide pause in most federal student loan payments is now well into its third year. The relief, codified into law by Congress in response to the economic crisis related to the Covid-19 pandemic with the passage of the CARES Act in March 2020, also halted all accrued interest on federal government student loans and continued collection efforts against defaults from federal student loan borrowers. Importantly, only federal student loans owned or owned by the government are eligible for the relief (although later executive action by President Biden extended the suspension of collections to commercially held federal loans from the FFEL program).

Congress originally stipulated that the relief would last six months. However, as the economic fallout from the pandemic continued, President Trump and then President Biden granted several short-term extensions, often waiting until payments were about to resume before delaying the deadline further. Biden’s latest payment pause extension is set to end on August 31, meaning student loan payments will resume by September.

Biden could extend the student loan hiatus again for several reasons

There are several reasons why another extension of the student credit break could be coming.

First, the economy remains struggling as millions of Americans grapple with rising prices amid rising inflation and recession fears. Administration officials have repeatedly said they would consider economic factors when deciding whether to further extend the student loan payment pause.

Biden officials have made it clear that the August 31 deadline is not set in stone. “We recognize that while the economy has improved, many Americans are still struggling to make ends meet,” Secretary of Education Miguel Cardona told senators last month, noting that the pause on student loans is being further extended as a result could become.

In addition, Department of Education officials have promised borrowers “reasonable notice” before payments resume and a “long driveway” to ensure borrowers have enough time to prepare to make payments. With just seven weeks until the end of the payments pause, the Biden administration will be running out of time to deliver on those promises.

Specifically, in the weeks and months leading up to the end of the student loan payment pause, the Department of Education sent out mass communications to millions of borrowers, repeatedly informing them that repayment was imminent. The ministry has not issued any such notices as the August 31 deadline nears.

Finally, there may be practical considerations as well, including the upcoming midterm elections in November. Additionally, the Department of Education has yet to complete the implementation of several key student loan forgiveness and facilitation initiatives, including the Limited PSLF Waiver Program, new student loan forgiveness through borrower defense through repayment, and a new IDR adjustment that is expected to benefit even more students will result in loan forgiveness. None of these initiatives are expected to be completed before September.

Stakeholders are urging Biden to extend student loan pause again

A coalition of 180 advocacy groups sent a letter to President Biden last week, urging him to extend the student loan pause again. The coalition has expressed concern over reports that senior Biden officials are viewing the resumption of student loan payments as a Mechanism to fight inflationespecially if Biden decides to enact broader student loan forgiveness, which remains under consideration.

“We … urge your government not to collect money from people with student debt to fight inflation,” the coalition wrote.

“The pause in most federal student loan payments during the pandemic has provided much-needed respite for … over 1.7 million educators, nurses and public servants, along with millions of other borrowers who feel impoverished by the reduction in student loan debt,” said American The Teachers’ Association President , Randi Weingarten, in a statement accompanying the coalition’s letter. “Hastily resuming payments now, at this time of rising costs, and while thousands are still waiting for their loan forgiveness applications to be processed would be devastating.”

Biden administration officials have yet to make a final decision on whether to extend the payment pause and have not provided borrowers with a specific timeline for when that decision will be made.

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