Biden Administration Extends Pause on Federal Student Loan Repayments Through August

"The repayment freeze, which has been in place since the beginning of the pandemic, had been scheduled to expire on May 1."

Why this is important: At the beginning of the pandemic in March 2020, the CARES Act included a pause for all federal student loans. That pause has been extended several times by former President Trump during his remaining term and by President Biden since he assumed the presidency. “Borrower balances have effectively been frozen for more than two years, with no payments required on most federal student loans since March 2020. During this time, interest has stopped adding up and collections on defaulted debt have been on hold.” The pause on repayment has saved some borrowers more than $5,000 in interest payments and cost the government nearly $4 billion a month according to some estimates. The most recent pause extension was set to expire May 1. However, the administration has extended the payment pause for federal student loan repayment once again. Now, repayment will be delayed until August 31. In a recent statement, “the Department of Education said that it will allow all borrowers with paused loans to receive a ‘fresh start’ on repayment by eliminating the impact of delinquency and default and allowing them to reenter repayment in good standing.” The delay allows servicers, some of whom have had numerous student loans transferred for servicing due to changing government contracts, more time to prepare for the restarting of payments and to process any borrower requests relating to alternative payment arrangements.