Local

White House to extend student loan pause through August

The Biden government plans to freeze federal student loan payments by Aug. 31, extending a moratorium that has allowed millions of Americans to defer payments during the coronavirus pandemic, according to a government official . Student loan payments were scheduled to resume on May 1 after being suspended by pandemic authorities. However, following calls from Democrats in Congress, the White House plans to give borrowers extra time to prepare for payments. The action applies to more than 43 million Americans who owe a total of $ 1.6 trillion in student debt owed by the federal government, according to the latest figures from the Department of Education. That includes more than 7 million borrowers who have defaulted on student loans, meaning they are at least 270 days behind in payments. Borrowers will not be required to make payments after August 31 and interest rates are expected to remain at 0% during that period. The extension was first reported on Tuesday by Bloomberg. Democrats in House and Senate education panels recently urged President Joe Biden to extend the moratorium until the end of the year, citing continuing economic turmoil. Sen. Patty Murray said more time was needed to help Americans prepare for repayment and to review the government’s existing system for repaying student debt. “It destroys lives and holds people back,” she said in a statement last month. “Borrowers are struggling with rising costs, struggling to recover from public health and financial crises and struggling with a broken student loan system – and all of this is being done particularly hard by colored borrowers,” Murray told Biden. administration to remove all borrowers from default to provide a “new beginning” after the pandemic. The decision comes amid growing concern that large numbers of Americans would quickly fall behind if payments resumed in May. In March, the Federal Reserve Bank of St. Louis Reserve Bank warned that the resumption of loan payments could place a heavy burden on borrowers who ran into financial difficulties during the pandemic. He said the impact would be more difficult for black families, who are more likely to rely on student loans to pay for college. “Serious student debt delinquency rates could fall from historic lows to previous highs, where 10% or more of debt was overdue,” the bank said. The Trump administration initially gave the Americans the option to suspend loan payments in March 2020, and Congress did so automatically shortly thereafter. The truce was extended twice by the Trump administration and twice by Biden. It remains to be seen whether Biden will pursue large-scale debt relief to reduce the country’s student debt. Some Democrats in Congress have pressured Biden to use executive action to cancel $ 50,000 for all student borrowers, saying it would boost the economy and help black Americans with higher average student debt levels. by the departments of Education and Justice to reconsider the legality of the extended debt write-off, but no decision has been announced. Biden had previously said he supported the cancellation of up to $ 10,000, but argued that it should be done through congressional action.

The Biden government plans to freeze federal student loan payments by Aug. 31, extending a moratorium that has allowed millions of Americans to defer payments during the coronavirus pandemic, according to a White House official who knows the .

Student loan payments were scheduled to resume on May 1 after being cut short by pandemic authorities. However, following calls from Democrats in Congress, the White House plans to give borrowers extra time to prepare for payments.

The action applies to more than 43 million Americans who owe a total of $ 1.6 trillion in student debt owed by the federal government, according to the latest figures from the Department of Education. This includes more than 7 million borrowers who have defaulted on student loans, meaning they are at least 270 days late in their payments.

Borrowers will not be required to make payments after August 31 and interest rates are expected to remain at 0% during this period.

The extension was first reported by Bloomberg on Tuesday.

Democrats in House and Senate education panels recently urged President Joe Biden to extend the moratorium until the end of the year, citing continuing economic turmoil.

Senator Patty Murray said more time is needed to help Americans prepare for repayment and to review the existing government system for repaying student debt.

“It destroys lives and holds people back,” she said in a statement last month. “Borrowers are struggling with rising costs, struggling to get their feet back in the midst of public health and financial crises, and struggling with a broken student loan system – and all of this is being done particularly hard by colored borrowers.”

Murray called on the Biden government to remove all borrowers from bankruptcy to offer a “new beginning” after the pandemic.

The decision comes amid growing concern that large numbers of Americans would quickly fall behind if payments resumed in May.

In March, the Federal Reserve Bank of St. Louis warned that the resumption of loan payments could place a heavy burden on borrowers who ran into financial difficulties during the pandemic. He said the impact would be more difficult for black families, who are more likely to rely on student loans to pay for college.

“Serious student debt delinquency rates could fall from historical lows to previous lows, where 10% or more of the debt was in arrears,” the bank said.

The Trump administration initially gave Americans the option to suspend loan payments in March 2020, and Congress did so automatically shortly thereafter. The truce was extended twice by the Trump administration and twice by Biden.

It remains to be seen whether Biden will pursue large-scale debt relief to reduce the country’s student debt. Some Democrats in Congress have pressured Biden to use executive action to cancel $ 50,000 for all student loan borrowers, saying it would boost the economy and help black Americans with higher average student debt levels.

Last year, Biden asked the Education and Justice departments to reconsider the legality of the extended debt write-off, but no decision has been announced. Biden had previously said he supported the cancellation of up to $ 10,000, but argued that it should be done through congressional action.

White House to extend student loan pause through August Source link White House to extend student loan pause through August

Related Articles

Back to top button