Here’s what happens next when President Joe Biden extends the student loan payment pause.
Here’s what you need to know – and what it means for your student loans.
President Joe Biden has just 15 days to decide whether to extend the student loan payment pause for more than 40 million student loan borrowers. Without an extension, student loan payments will resume on September 1. Biden has remained silent on whether he would extend the deferral on student loans that student-loan borrowers have enjoyed since March 2020, when Congress passed historic student-loan relief. If Biden extends student loan payments, here are 5 things that could happen next.
1. Biden would announce an extension of the student loan payment pause
If Biden extends the student loan payment pause for the seventh time, Biden would make a formal announcement in the coming days. The student loan payment pause expires on August 31, 2022. That means Biden has less than two weeks to announce whether he will extend student loan deferrals for millions of student borrowers. If Biden extends that student loan easement, he would be using his executive powers as president.
2. The Ministry of Education will inform you about further student loan facilitations
Once Biden officially extends student loan relief, the U.S. Department of Education will notify you in writing. So don’t worry if you miss an announcement about Biden’s possible extension of the student loan payment pause. The Department of Education should contact you directly and post the details on their website and through Federal Student Aid. Your student loan administrator also has the latest information on student loan deferrals.
3. Student loan payments could resume in months
If Biden extends the student loan payment pause, expect student loan leniency to continue for several more months. Republicans say Biden could extend student loan payments pause beyond November to encourage voters to vote Democrat in the Nov. 8 midterm election. For example, instead of expiring on August 31, the student loan payment pause could be extended to December 31, 2022. Alternatively, if Biden does not want to resume student loan payments on Jan. 1, 2023 — a federal holiday — he could extend the student loan payment pause to Jan. 31, 2023.
4. Biden will rule on student loan forgiveness
Student loan payment pause is not the only major student loan decision. Biden made three key decisions about student loans. Most importantly, student loan borrowers want to know if Biden will issue a sweeping student loan forgiveness. Republicans have proposed their own blockbuster student loan forgiveness plan. Biden said he will announce his decision on student loan forgiveness before Aug. 31, when the student loan payment pause expires. While Biden could make separate announcements, Biden is more likely to announce his decisions on both policies related to student loans together. However, borrowers want to avoid a nightmare scenario where no student loan is issued and the student loan payment pause is not extended.
5. The student loan payment pause would still be temporary
Even if Biden extends student loan relief, it would only be temporary. Yes, you may not receive mandatory student loan payments for a few more months. However, if you’re anticipating a “permanent” pause in student loan payments, guess again. Federal student loan payments will eventually resume. If Biden extends student loan easing now, it could be the extension for good. That’s why you should create a game plan for your student loan now. Understand all of your student loan repayment options. Here are some of the best ways to pay off student loans faster and save money: