At the request of President Joseph R. Biden, the Acting Secretary of Education will extend the pause on federal student loan payments and collections and keep the interest rate at 0%, according to a Thursday morning news release from the White House. The extension is a nearly year long pause on student loan payments through September 30, CBS News reports.
The release went on to state: “Too many Americans are struggling to pay for basic necessities and to provide for their families. They should not be forced to choose between paying their student loans and putting food on the table.”
CBS News reported that requesting a forbearance extension on federal student loans was among 17 executive actions President Biden signed on his first day in office. These actions on student debt and and an extension on eviction and foreclosure moratoriums, are targeted at relieving Americans from economic burdens worsened by the novel coronavirus pandemic.
Since March, all federal student loan payments have been suspended as part of the federal government’s COVID-19 response, CBS News reported. An extension of the grace period was included in early drafts of December’s stimulus package, but was cut in final negotiations. Prior to President Biden’s executive action, payments were scheduled to resume at the end of January.
Student loan debt has been a looming financial issue since before the COVID-19 pandemic began, but widespread coronavirus-related job losses and pay cuts, especially among millennials, have exacerbated the issue, CBS News reported. In 2020, federal student loan debt reached an all-time high, nearing $1.6 trillion among more than 40 million Americans, according to data and statistics from the Federal Reserve Bank of New York. Student loan borrowers, on average, owe between $200 and $299 every month, an amount that for many is simply untenable; about one in every five borrowers is in default, according to quarterly private collection agency statics from the U.S. Department of Education.
A Pew study from November found that nearly 6 in 10 borrowers said it would be “somewhat” or “very difficult” to restart payments on their loans the next month, CBS reported.