Pause on student loan payments is extended through May 1

WASHINGTON, D.C. (AP) – The Biden administration extended a student loan moratorium on Wednesday, allowing tens of millions of Americans to defer debt payments while the flu pandemic raged.

Payments on federal student loans will be halted until May 1 due to the measure. During that time, interest rates will stay at 0%, and debt collection efforts will be stopped. Those precautions had been in place since the pandemic, but they were slated to expire on January 31.

According to President Joe Biden, financial recovery from the pandemic would take longer than employment recovery, especially for individuals with student loans.

"We recognize that millions of student loan borrowers are currently dealing with the effects of the pandemic and require additional time before starting payments," he said in a statement, adding that it was a subject "both he and the vice president really care about."

The omicron version of COVID-19 that has swept the United States with a vengeance has given the subject of whether the ban should be prolonged fresh urgency. Officials in the administration had previously stated that the January extension would be the final one. Even when the economy improves, there remain fears that borrowers would be unable to resume payments. Those already behind on payments may have their income and perks taken away as part of debt collection attempts once the moratorium ends.

The move affects more than 36 million Americans who owe money to the federal government on student loans. According to the most recent Education Department data, their overall debt is more than $1.37 trillion. In addition, approximately a third of debtors are in default or delinquency, with a monthly payment of $400. The halt, according to officials, also benefits about 5 million other borrowers who are still in school and have not yet paid off their debts but are accruing interest.

According to Education Secretary Miguel Cardona, the extension will allow repayment schemes tailored to student's financial circumstances, including an income-driven payback plan.

"The sustained halt will provide crucial assistance to borrowers who continue to endure financial challenges as a result of the epidemic," Cardona said. "It will also allow our administration to analyze the impacts of omicron on student borrowers."

In March 2020, the Trump administration froze federal student loan payments, which extended until January 2021. Biden has already moved to open it twice, and the Education Department has expressed reservations about the consequences of abruptly restarting payments, both for students and the department's administration.

The loan moratorium has been extended as deciding whether or not to erase significant swaths of student debt is still pending table.

The loan moratorium has been extended as deciding whether or not to erase significant tracts of student debt is still being considered.

Some Democrats are advocating for debt forgiveness on a large scale. However, Biden has questioned whether he has the right to make such sweeping cancellations, and legal experts disagree. Biden requested the Departments of Education and Justice to look into the matter earlier this year. Work is still going on, according to officials.

Biden has previously stated that he supports the cancellation of up to $10,000 in student debt but should be handled by Congress.

Student advocates were relieved by the extension since they had hoped for a more permanent solution.

Wisdom Cole, NAACP Youth & College national director, remarked, "We can finally take a breath knowing that student loan payments will be paused again."

However, meaningful relief would only occur if student loans were canceled.

"Cancel student debt to provide financial relief during omicron," he stated. "Cancel student debt to help the economy. Cancel student debt to reduce the racial wealth gap."

Meanwhile, in October, the Obama administration loosened the restrictions for the student loan forgiveness program in place, eliminating some of the most stringent conditions for the program, which was established in 2007 to encourage more college graduates to enter public service.

All student loan borrowers, according to Biden, should "pay their part as well." As they prepare for payments to restart, he advised them to take advantage of Education Department resources, look into income-based repayment arrangements, look into public service loan forgiveness, and "make sure you get vaccinated and boosted when eligible."

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