President Joe Biden announced Wednesday that the repayment freeze on federally held student loans would be extended through August.
The pause in payments affects over 36 million borrowers, who collectively hold over $1.3 trillion in student loan debt.
“If loan payments were to resume on schedule in May, analysis of recent data from the Federal Reserve suggests that millions of student loan borrowers would face significant economic hardship, and delinquencies and defaults could threaten Americans’ financial stability,” the president said in a statement. “Accordingly, to enable Americans to continue to get back on their feet after two of the hardest years this nation has ever faced, my Administration is extending the pause on federal student loan repayments through August 31st, 2022.”
BIDEN SET TO EXTEND STUDENT LOAN FREEZE UNTIL END OF AUGUST
The pause on federal student loan payments was first implemented by the Trump administration in the early days of the COVID-19 pandemic. The pause has since been extended multiple times, most recently in December 2021.
The president also called on borrowers to prepare to resume repayments by working with the Department of Education to “prepare for a return to repayment” and “look into Public Service Loan Forgiveness, and explore other options to lower their payments.”
Education Secretary Miguel Cardona touted the extension of the pause, saying it would “allow borrowers to gain more financial security as the economy continues to improve and as the nation continues to recover from the COVID-19 pandemic.”
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
“It remains a top priority for the Biden-Harris Administration to support students, families, and borrowers — especially those disproportionately impacted by the pandemic,” Cardona said. “During the pause, we will continue our preparations to give borrowers a fresh start and to ensure that all borrowers have access to repayment plans that meet their financial situations and needs.”
The forbearance has cost the federal government nearly $8 billion per month, according to some estimates, including over $98 billion between the 2020 and 2021 fiscal years.
Jonathan Butcher, an education expert at the conservative Heritage Foundation, told the Washington Examiner the latest extension “continues the process of shifting the costs of unpaid loans from students to working Americans.”
“Research finds that graduate students and students from upper-income families have more in loans than students from lower-income homes and in 4-year programs — so any so-called proposals for ‘forgiveness’ disproportionately helps wealthier borrowers,” Butcher said.
