Biden Administration to Extend Pause on Federal Student Loan Payments to 2022

The Biden administration once again has plans to extend the freeze on federal student loan payments until the end of January 2022. This marks the fourth time the Education Department has given borrowers a pause in payments during the pandemic. The Department says it will be the final extension offered to borrowers, and payments will resume in January. The pandemic relief, which halts monthly loan payments and interest for approximately 41 million Americans, was originally set to expire at the end of September.

This decision was made after top congressional Democrats urged the administration to continue the pandemic relief into 2022. Progressives have also increased their advocacy in recent weeks after they persuaded the Biden administration to issue an updated moratorium on evictions. The push back was a result of the public health crisis which has left many people struggling to regain their financial well-being.

The Education Department stated that it will begin notifying borrowers about the final extension in the next few days, and will provide resources about how to be prepared to resume payments as the end of the moratorium approaches. All borrowers with student loans from the Education Department will have their payments automatically delayed until January 31st without any penalty or interest accruing. Each month until then will count toward loan forgiveness for borrowers in public-service jobs. It will also count toward student loan rehabilitation, a federal program that removes defaults from a person’s credit report after nine consecutive payments.

Collections on defaulted federal loans will still be paused, and borrowers with defaulted federal loans whose wages are being garnished will get a refund. These regulations still exclude approximately 7 million borrowers whose federal loans are held by private companies or universities. Nevertheless, about 41 million Americans will benefit from the continued pause in loan payments according to the Department of Education.