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Biden extends payment pause on federal student loans until September


As the recovery of the economy from the pandemic lows has continued, the Biden administration is trying to end the pause in student loan payments.

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The President Joe Biden has announced Wednesday that he will extend the payment pause for federal student loans up to September.

This sixth prolongation of the break is now complete. The previous five span more than 24 months. According to the Federal Reserve, Borrowers have saved more than $200 billion in that time. found.

Former Trump administration established the first pandemic-era policy to freeze the debts of the tens million Americans with education debt in March 2020. It was then that the US economy collapsed under the impact of the coronavirus pandemic.

According to Mark Kantrowitz, a higher education expert, almost all eligible borrowers for the pause used it. Only 1% continued to pay. 

Biden stated that although the country has made great improvements in recent years, it is risky to start student loan repayments right away.

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Biden stated in a statement that “We are still recovering” from the pandemic, and caused unprecedented economic disruption.

Biden stated that resuming payments could “threaten Americans’ financial stability”, citing recent events researchFederal Reserve predicted a rise of defaults and delinquencies as bills resume.

Biden also feels under immense pressure to repay student loans. Biden made a promise to erase $10,000 on his campaign trail.

Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Elizabeth Warren, D-Mass., are pushing him to cancel closer to $50,000 per borrower.

A recent poll found that 66% of potential voters support the president’s plan to forgive student debt. More than 70% of Latino voters and Black voters also supported this move. found.

Ron Klain, White House Chief Of Staff, stated last month that the administration would like to reach a decision about loan forgiveness before making payments again.

Klain: “The President is going to examine what we should do about student debt before it expires or he will extend the pause.” said on the podcast “Pod Save America.”

Student loans had been a significant problem for many families even before the current public health crisis. The outstanding education debt is more burdensome than credit cards or auto debt, and exceeds $1.7 trillion.

About 40 million Americans have student loan debts, with more than half of them past due. On average, the balance exceeds $30,000.

However, repeated extension of the payment suspension will create problems for the borrowers. Scott BuchananExecutive director, Student Loan Servicing Alliance. This trade association is for federal student loan servicers.

When the government changes its mind, what’s for a borrower? Buchanan said. Buchanan said, “When the inevitable resume will finally occur, millions of borrowers are likely to miss it and become delinquent due to the false expectations that the government is setting.”

Kantrowitz stated that borrowers won’t take September’s restart date too seriously.

Kantrowitz stated that the U.S. Department of Education had extended the interest waiver and payment pause so many times, and given such late notice that no one will believe them when it comes to restarting repayment.

He said, “They must stop being on the fence regarding student loan forgiveness.”

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