In a much relief to student borrowers, US President Joe Biden is likely to extend the student loan payment moratorium. However, no official announcement has been made so far in this regard.
As there have been no communications from the creditors to the borrowers regarding repayment, people expect an extension on the payment pause is likely in the offing. Statutorily, the creditor must inform the borrowers six months in advance about the resumption of the loan repayment schedule.
Given the Covid-19 pandemic, millions of student borrowers were exempted from loan payments over the last two years. However, as the pause period expires on May 1, President Biden may extend it, as per some trusted sources in the Biden administration.
In response to the Covid-19 pandemic, the US Congress enacted the CARES Act in March 2020, which provided a long-running pause on most student loan payments. Besides halting recovery efforts against student borrowers by creditors, the loan relief act also suspended the interest accrual during the pause period.
Though the act had envisioned only a six-month relief initially, the pause period was extended successively as the economic fallout due to the pandemic worsened. The pause period saw several extensions during President Trump’s period, and President Biden followed suit.
With the pause date coming to an end on May 1, many expected resumptions of loan payment notices. However, last month, the US Department of Education reportedly instructed its contracted loan servicers not to send repayment notices to student borrowers, reported Politico last month.
For student loan activists, these are potent signs that the administration is most likely going to extend the loan moratorium period, especially for student borrowers.
Student activists, lawyers, and pressure groups have already been demanding an extension on the pause period.
Last month, hundreds of activists and student-friendly organizations penned a letter to the US president requesting an extension of the moratorium while citing inflation and ongoing economic uncertainty.
This week, hundreds of student loan borrowers staged a protest march near the capitol arena urging Biden to show leniency and extend the moratorium period through executive action.
Student activists also conducted several polls showing that most student borrowers want an extension in loan repayment.
Significantly, top democrat and republic politicians in Congress are also putting pressure on the administration to adopt a lenient and considerate view on student loan extension demand.
Experts believe that the upcoming midterm elections might also consider if the Biden administration goes ahead with the extension plan. Not extending the pause period may put Democrats in a precarious position who hold only narrow majorities in the House and Senate.
For the last few months, the Biden administration has been engaged in efforts to bring in comprehensive student loan forgiveness programs and create a new income-driven repayment plan.