Update: Federal student loan payment suspension has been extended through January 31, 2022.
One of President Biden’s first acts in office was to extend federal student loan forbearance — set forth by the CARES Act in March 2020 — through the end of September 2021. And after hints from Education Secretary Miguel Cardona on June 16, speculation is rising that Biden might extend payment suspension again.
For the millions of student loan borrowers who are still struggling after months of financial turmoil, a further extension — potentially through the end of the calendar year, as advocates have proposed — would be welcome news.
But extension hopefuls shouldn’t hold their breath. Until the Biden administration says otherwise, federal student loan borrowers should plan on resuming payments in October — here’s why:
It could be a long time before Biden reaches a decision.
It’s true that Biden acted quickly to approve the first extension the day after his inauguration. But progress on other student loan support is moving slowly — if progress has started at all.
It’s unlikely that Biden will make a quick decision about another extension. And even if it is approved, it’s entirely possible that we won’t know until the final days before the current suspension term ends. Borrowers who don’t start preparing to make payments because they’re holding out hope for forbearance risk a serious strain come October.
Biden continues to focus on segmented federal student loan forgiveness.
President Biden’s student loan relief strategy centers on forgiveness for specific borrowers — and he’s taken significant action in recent months.
This approach was demonstrated just last week. Borrower defense is supposed to cancel student debt held by borrowers who were defrauded by their school — but controversial policies enacted during Betsy DeVos’s term as Education Secretary left thousands of eligible students in limbo for years. Biden approved on June 16 the reversal of those policies, and in turn granted a total of $500 million to 18,000 students who attended the now-defunct ITT Technical Institute.
These new discharges offer a preview of what the new Department of Education reform initiative — announced last month — aims to accomplish. After public hearings take place later this week, a negotiated rulemaking committee will convene to devise recommendations that will ultimately inform regulatory updates. The potential changes include revisions that grant forgiveness to borrowers through income-driven repayment plans and the Public Service Loan Forgiveness program.
The Biden administration’s increased focus on these initiatives could indicate that they intend to provide continued aid through special forgiveness programs — instead of continued payment forbearance.
$10,000 in student debt cancellation is still on the table.
Another way Biden could support federal student loan borrowers — instead of extended forbearance — is debt cancellation.
While Biden made it clear that he is unequivocally against higher amounts of widespread cancellation, he also expressed support for proposals to grant borrowers up to $10,000 in forgiveness. And even though forgiveness didn’t make the cut in his next annual budget, he’s still investigating his legal authority to cancel student debt through an executive order.
If Biden decides to grant partial forgiveness over the summer, it’s very possible that it could take the place of continued suspension — but if your outstanding federal student loan balance is greater than what is cancelled, you may still have to resume payment in October.
What comes next for federal student loan forbearance:
There are too many variables remaining for borrowers to confidently assume that the payment freeze will be extended again. In order to avoid coming up short, borrowers should continue to prepare to resume repayment in October.
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