US president Joe Biden plans to extend the pause on federal student loan payments through August, according to reports in Politico and the Wall Street Journal citing unnamed sources. An official announcement could come as soon as tomorrow (April 6).
Roughly 37,000 borrowers have not had to make payments on their student loans for more than two years, under a government policy that was first instituted in March 2020 due to the coronavirus pandemic. While the US economy has picked up since then, Biden is facing pressure from Democrats to extend the freeze, or even cancel student loans altogether. The president already has extended the loan freeze three separate times, most recently in December.
How long will the student loan pause be extended?
While an extension would give borrowers more time before they have to start paying down their debt again, it falls short of a request by nearly 100 lawmakers asking Biden (pdf) to extend the student loan freeze until at least the end of 2022, and to “provide meaningful student debt cancellation.”
When Biden campaigned for president he expressed support for canceling $10,000 of federal student debt per person. But given that Biden still doesn’t have enough votes to pass his signature social spending agenda, meaningful legislative action on student debt this year seems unlikely.
Most eligible borrowers have taken advantage of the pause
Federal student loans account for the majority of student debt in the US. Most borrowers eligible for automatic forbearance have taken advantage of the freeze.
An estimated $195 billion worth of student loan repayments have been waived since the moratorium began, a March 23 study published by the New York Federal Reserve found, with 97% of direct federal student loan borrowers electing to hold off on paying back their debt.