Will Biden Extend Student Loan Pause? 5 things borrowers should know as August 31 fast approaches – Forbes | Vette Leader

Borrowers are running out of time as the ongoing student loan pause nears its last extended deadline.

Student loan payments and accrued interest on federal state student loans have been frozen for over two years. The student loan pause was originally scheduled to last six months after the CARES Act — legislation passed by Congress in March 2020, in the early weeks of the coronavirus pandemic. But the pause was later extended multiple times by President Trump and then by President Biden. Biden’s most recent extension ends on August 31, which is a few days away.

August 31 is fast approaching, here’s what student loan borrowers should know.

A student loan extension has never been issued so close to the end date

There are only 16 days left until August 31 – just over two weeks. Previously, there were six student loan break extensions. But all previous expansions have been announced at least three weeks in advance until the expected end date of the break. An extension has never been granted so close to the deadline.

So if student loan borrowers are a bit concerned, it’s understandable — it’s actually unprecedented to cut it so narrowly.

The signs continue to point to a further extension of the student loan break

Despite the uncertainty, signs continue to point to Biden extending the student loan hiatus again. Senior administration officials have declined to describe the current extension as the “final” one (as opposed to previous extensions), promising borrowers sufficient notice before resuming repayments. Two weeks can hardly be considered advance notice.

Additionally, the Department of Education’s complex credit management system cannot simply flick a switch and turn on payments. Credit servicers must also be notified in advance. Last month, the Biden administration reportedly ordered loan servicers not to send billing requests to borrowers, which many took as a sign that student loan payments are not expected to resume any time soon.

Without a formal announcement, however, borrowers are left to speculate as to whether Biden will actually extend the student loan pause again.

An extension of the student loan hiatus could be linked to a decision on broad student loan forgiveness

Borrowers aren’t just waiting for a decision on student loan break extensions. President Biden has also said he has until March 31.

Biden administration officials had previously suggested that decisions to extend the student loan pause and the passage of a broad student loan could be linked. Some officials have assessed whether the resumption of student loan payments could serve as an economic counterbalance to broad student loan forgiveness, particularly in the context of historically high inflation. And the fact that Biden has confirmed he will make a decision on sweeping student loan forgiveness by Aug. 31 — the same date as the end of the payments pause — may not exactly be a coincidence.

More changes to student loan assistance programs may be forthcoming

Any extension of the student loan pause could be coupled with ongoing efforts to reform, expand or improve existing student loan forgiveness programs. The limited PSLF waiver, which the Biden administration issued last fall to expand access to the troubled public sector loan forgiveness program, is scheduled to end Oct. 31. Supporters have pushed for an extension.

Meanwhile, the Department of Education released proposed new regulations last month as part of a major overhaul of the state’s student loan forgiveness, discharge and repayment programs. The ministry may also soon release a proposed new income-driven repayment (IDR) plan as officials begin implementing the new IDR account adjustment, which is designed to spur borrowers’ progress toward student loan forgiveness. However, these reforms will not be fully implemented until 2023. A further extension of the student loan break may need to take this into account.

Borrowers have resources to keep track of student loan suspension, student loan forgiveness, and other reliefs

Coping with this unprecedented uncertainty is challenging for borrowers, but there are resources that can help borrowers stay abreast of new developments:

More reading on student loans

The Biden administration is poised to implement mass student loan forgiveness as the decision could come any day

A settlement offering $6 billion in student loan forgiveness clears the hurdle: 5 key takeaways

Did the Biden Administration Just Make a Big Hint About Student Loan Forgiveness?

If you’ve attended these schools, you may qualify for student loan forgiveness: here’s what to do

Leave a Comment