The student loan payment pause is set to end this month.
Here’s what you need to know — and what it means for your student loans.
After more than two years of historic student loan relief, the student loan payment pause ends on August 31, 2022 for more than 40 million student loan borrowers. As President Joe Biden considers whether to enact wide-scale student loan cancellation, student loan borrowers are left wondering what the future holds for student loan repayment. So far, the White House hasn’t indicated that the student loan payment pause will continue. With only weeks until expiration and no official communication to the contrary, student loan borrowers should prepare now for the restart of student loan payments.
The student loan payment pause
In response to the Covid-19 pandemic, Congress passed historic student loan relief through the Cares Act, a $2 trillion stimulus package. Since March 2020, student loan borrowers have received the following benefits for their federal student loans:
- no mandatory student loan payments;
- 0% interest rates on student loans; and
- no collection of student loans in default.
President Donald Trump extended this student loan relief twice, and Biden extended the student loan payment pause four additional times. As a result of this student loan relief, student loan borrowers collectively have saved $5 billion a month.
Will Biden extend the student loan payment pause?
Student loan borrowers are waiting for more information on student loan cancellation, the limited waiver for student loan forgiveness and other major changes regarding student loans. U.S. Secretary of Education Miguel Cardona has said Biden could extend the student loan payment pause beyond August 31. However, the Education Department hasn’t announced plans to continue this student loan forbearance. One indication the student loan moratorium could continue? Student loan servicers say the Education Department recently instructed them not to send student loan bills to student loan borrowers. This has fueled speculation that Biden could extend the student loan payment pause for the fifth time. More than 100 lawmakers have urged Biden to extend the student loan payment pause. They are concerned about the ongoing Covid-19 pandemic and uncertain economic environment. Sen Elizabeth Warren (D-MA) has warned Biden that restarting student loan payments will cause more student loan borrowers to default on their student loans. The legislators also want Biden to make more changes to student loans and student loan repayment, particularly after Biden delayed his new plan for student loans.
Republicans warn student loan payment pause will increase inflation
Republicans in Congress say student loan payments should restart immediately. They’re concerned with the rising cost to the federal government for both student loan forgiveness and the student loan payment pause. Republicans fear that both student loan forgiveness and an extension of the student loan moratorium will increase inflation, which is at a 40-year high. The White House says these policies would have minimal impact on inflation. However, Biden’s decisions on student loans come amidst a shocking government report that shows the federal government will lose nearly $200 billion on federal student loans issued over the past 25 years. Republicans also say Biden has canceled $400 billion of student loans and that another extension of the student loan payment pause is unfair to the majority of Americans who don’t have student loan debt. The Biden administration hasn’t indicated that any extension of the student loan payment pause is forthcoming. With only weeks remaining until the end of the student loan moratorium, student loan borrowers should understand all their options for student loan repayment. Know these popular ways to save money on your student loans to get out of debt faster:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)
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