The national student loan payment pause is set to end in just 54 days. Biden administration officials have suggested that a further extension is possible.
While no final decision has been made, several signs point to another extension of the payment pause. But without concrete information from the White House and Education Department, borrowers are in the dark about what to expect in the coming months.
Here’s where things stand.
Latest Extension of the Student Loan Pause Expires on August 31
The unprecedented national pause on most federal student loan payments is now well into its third year. The relief, codified into law by Congress when it enacted the CARES Act in March 2020 in response to the economic crisis associated with the Covid-19 pandemic, also stopped all interest accrual on government-held federal student loans, and suspended collections efforts against defaulted federal student loan borrowers. Importantly, only federal student loans held or owned by the government are eligible for the relief (although subsequent executive action by President Biden expanded the collections suspension to include commercially-held FFEL-program federal loans, as well).
Congress originally envisioned the relief lasting for six months. But as the economic fallout of the pandemic persisted, President Trump and then President Biden issued multiple short-term extension, often waiting until payments were just about to resume again before pushing out the deadline further. Biden’s most recent extension of the payment pause is set to end on August 31, meaning student loan payments would be resuming by September.
Biden Could Extend the Student Loan Pause Again, For Several Reasons
There are several reasons another extension of the student loan pause may be coming.
First, the economy remains in trouble, with millions of Americans struggling with rising prices associated with inflation and recession fears mounting. Administration officials have repeatedly said that they would consider economic factors when deciding whether to issue another extension of the student loan payment pause.
Biden officials have been clear that the August 31 deadline is not set in stone. “We recognize that while the economy has improved, many Americans are still struggling to make ends meet,” Education Secretary Miguel Cardona told senators last month, indicating that the student loan pause could be further extended as a result.
In addition, Education Department officials have promised borrowers “ample notice” prior to payments resuming, and a “long on-ramp” to ensure borrowers have enough time to get ready to make payments. With only seven weeks until the end of the payment pause, time is rapidly running out for the Biden administration to follow through on these promises.
Notably, during weeks and months leading up to prior expiration dates of the student loan payment pause, the Education Department sent out mass communications to millions of borrowers repeatedly notifying them that the return to repayment was imminent. The Department has issued no such communications as the August 31 deadline approaches.
Finally, there may be practical considerations as well, including the upcoming November midterm elections. In addition, the Education Department has not yet completed the implementation of several important student loan forgiveness and relief initiatives including the Limited PSLF Waiver program, new student loan forgiveness through Borrower Defense to Repayment, and a new IDR Adjustment expected to result in even more student loan forgiveness. None of these initiatives are expected to be completed before September.
Advocacy Groups Urge Biden to Extend the Student Loan Pause Again
A coalition of 180 advocacy organizations sent a letter to President Biden last week, urging him to extend the student loan pause again. The coalition expressed concern about reports that top Biden officials view the resumption of student loan payments as a mechanism to counteract inflation, particularly if Biden decides to enact broader student loan forgiveness, which continues to be under consideration.
“We…strongly urge your administration not to collect money from people with student debt as a tactic to fight inflation,” wrote the coalition.
“The pause on most federal student loan payments during the pandemic has provided much-needed breathing room for… over 1.7 million educators, nurses and public employees, along with millions of other borrowers who feel pauperized by crushing student loan debt” said American Federation of Teachers President Randi Weingarten in a statement accompanying the coalition’s letter. “A hasty restart of payments now, in this time of rising costs, and while thousands are still waiting for their loan forgiveness applications to be processed, would be devastating.”
Biden administration officials have not made a final decision yet on whether to extend the payment pause, and have not provided any specific timeline for borrowers for when that decision will be made.