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Student loan payment pause extended to Jan. 31, White House announces

The pause on federal student loan payments was set to expire at the end of September.

WASHINGTON — The Biden administration on Friday announced that the moratorium on federal student loan payments would be extended until Jan. 31, just weeks before the pause was set to expire at the end of September.

In a statement, the Department of Education said that this would be the "final extension" and that it felt that a "definitive end date" would reduce the risk of delinquency and defaults once payments restart.

Debt relief advocates and some Democrats had been pressuring President Joe Biden to extend the payment pause as the country navigates the economic uncertainty of the pandemic. Many also 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," Secretary of Education Miguel Cardona said in a statement. "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 restart and ensure a smooth pathway back to repayment."

The federal student loan payment moratorium began in March 2020 when Congress passed the CARES Act, which paused payments through September 2020 and kept interest rates at 0 percent for the roughly 42 million federal borrowers in response to the pandemic.

Then-President Donald Trump then took executive action to extend the student loan payment deferral through January, and Biden on his first day in office signed an executive order continuing the pause through Sept. 30.

Consumer advocates have warned that turning federal student loan payments back on will be a massive undertaking for the Education Department and will require a significant amount of outreach from the Biden administration to make sure borrowers are aware that payments are once again due.

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.

The payment moratorium does not apply to borrowers with privately held loans.

Proponents of student debt relief welcomed the extension, but continued to pressure Biden to take more aggressive action.

"While this temporary relief is welcome, it doesn’t go far enough," Senate Majority Leader Chuck Schumer, D-N.Y., Sen. Elizabeth Warren, D-Mass., and Rep. Ayanna Pressley, D-Mass., said in a joint statement.

"We continue to call on the administration to use its existing executive authority to cancel $50,000 of student debt. Student debt cancellation is one of the most significant actions that President Biden can take right now to build a more just economy and address racial inequity," they added.

The White House has said that the Education Department is reviewing Biden's legal authority to wipe out debt through executive action, but the administration has been unable to provide a timeline of that review.

Biden has said that he does not believe he has authority to cancel student debt unilaterally, but would support Congress passing a bill canceling $10,000 in debt.

The Federal Reserve estimated that in the second quarter of 2021, Americans owed more than $1.7 trillion in student loans. Studies show that students of color are more likely to take on student debt and disproportionately struggle to pay it back. The highest default rates are among students who attended for-profit institutions.