The Joe Biden administration gave a huge relief to students in the United States on Friday as it announced an extension of the federal student loan payment moratorium until January 31, just weeks before the pause was set to expire at the end of September.
The Department of Education said in a statement this extension would be the “final” and that it felt a “definitive end date” would help to reduce the risk of delinquency and defaults once payments restart, NBC News reported.
The administration was facing intense pressure from debt relief advocates and a section of Democrats to extend the payment pause as the country continues to navigate the economic uncertainty of the coronavirus pandemic. Many argued that it was unfair to let the moratorium expire at the end of September without giving borrowers ample time to prepare.
“The payment pause has been a lifeline that allowed millions of Americans to focus on their families, health, and finances instead of student loans during the national emergency. As our nation’s economy continues to recover from a deep hole, this final extension will give students and borrowers the time they need to plan for the restart and ensure a smooth pathway back to repayment,” NBC quoted Secretary of Education Miguel Cardona as saying.
The federal student loan payment moratorium began in March 2020 with the passage of the CARES Act by Congress. The act paused payments through September 2020 and kept interest rates at 0% for the roughly 42 million federal borrowers in response to the pandemic.
It has seen two extensions, one by President Donald Trump who extended the student loan payment deferral through January. Biden on his first day in office signed an executive order continuing the pause through September 30.
The Education Department said they would begin reaching out to borrowers in the coming days to notify them about the extension and will provide resources to plan for the payment restart.