Borrowers will get one more month of reprieve from their student loans.
photo by robyn beck/Agence France-Presse/Getty Images
Student loan borrowers will get at least one more month of reprieve.
The Department of Education announced on Friday that Secretary of Education Betsy DeVos extended the coronavirus-era freeze on student loan payments and collections through Jan. 31, 2021. The measure, which was initially set to expire on December 31, paused payments and collections on some federal student loans. In addition, interest rates on the debt were set to 0% during the freeze.
Those measures will remain in place through January 31, according to a news release. The office of Federal Student Aid, the unit within the Department of Education that manages the student loan program, is currently working with student loan companies to notify borrowers that the payment pause has been extended, the release said.
Over the past several weeks, borrowers, student loan companies and advocates had grown increasingly concerned about the prospect of turning the entire student loan system back on amid still widespread economic fragility.
In addition, the initial December 31 timing presented particular challenges. For one, it meant payments would resume on the heels of the holiday season, a time when borrowers are less likely to focus on the paperwork involved in signing up for a manageable student-loan repayment plan and when they face additional pressure on their budget.
What’s more, there was a possibility that the government would resume collecting student loan payments on January 1, but the Biden administration would reinstate the payment freeze after taking office on January 20, creating a slew of confusion and administrative headaches.
With Friday’s announcement the question of whether borrowers will have to resume payments has been punted another month, amid news that stimulus talks in Washington are gaining momentum.
A coalition of consumer, civil rights and student organizations wrote to DeVos in October asking her to extend the payment pause through September 2021. In a statement announcing the extension, DeVos said that ultimately the approach to student loan relief should rest with Congress.
“The coronavirus pandemic has presented challenges for many students and borrowers, and this temporary pause in payments will help those who have been impacted,” DeVos said in the statement. “The added time also allows Congress to do its job and determine what measures it believes are necessary and appropriate. The Congress, not the Executive Branch, is in charge of student loan policy.”
Over the past few months, advocates and some mainstream Democrats have been urging President-elect Biden to cancel at least some student debt, arguing that the executive branch has the legal authority to do so. DeVos criticized the notion of student debt forgiveness earlier this week, calling it “wrong.”
