The Biden administration will exempt Americans from paying their federal student loans until the end of January, extending the moratorium for what it claims is the final time as the government works to keep the economy on track.
The move maintains the suspension of payments for all loans owned by the Education Department, as well as a 0% interest rate and a moratorium on debt collection.
Payments will be due again on February 1.
All of the loan measures, which were first implemented in March 2020, were set to expire at the end of September.
According to a person familiar with the matter who spoke on the condition of anonymity to preview the plan, the administration intends for this to be the final extension of the protections and announced the extension Friday to provide certainty to borrowers and loan servicers alike.
The announcement gives the Education Department’s servicing companies more time to prepare for the influx of borrowers.
The measures benefited 41 million borrowers in total, including several million current students.
“During the national emergency, the payment pause has been a lifeline that has allowed millions of Americans to focus on their families, health, and finances rather than student loans,” Education Secretary Miguel Cardona said in a statement.
“As our country’s economy continues to recover from a deep hole, this final extension will provide students and borrowers with the time they need to plan for a restart and ensure a smooth path back to repayment.”
President Joe Biden and Cardona were under pressure from congressional Democrats, including Senate Majority Leader Chuck Schumer, who warned last month that restoring payments would push “millions of borrowers to the brink of financial disaster.”
Senators Chuck Schumer and Elizabeth Warren of Massachusetts have been among the most vocal in urging the administration to extend the protections.
The temporary extension relieves some of the pressure on Schumer and Warren to persuade Biden to forgive up to $50,000 in student debt per borrower.
The two senators see the pandemic protection as the first step toward their goal, despite the fact that Biden has stated that he does not believe he has the authority to cancel so much student debt.
According to the president, he believes he could eliminate up to $10,000 in debt per borrower.
The departments of Education and Justice have been conducting a months-long investigation into the matter.
According to a Pew Charitable Trusts poll conducted in May and June, 67 percent of student loan borrowers said it would be difficult to afford payments if they resumed the following month.
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Despite the fact that the end of forbearance was announced on September 30, 52 percent of those affected by the pause said they did not know when they would be required to resume payments, implying that they will require assistance from the Education Department and loan servicers in transitioning back to repayment.
