'During the pause, we will continue our preparations to give borrowers a fresh start and to ensure that all borrowers have access to repayment plans that meet their financial situations and needs,' Miguel Cardona, the education secretary, said in a statement. Their accounts will be returned to good standing and any delinquency will be 'cured,' allowing them to repair their credit and gain access to programs like income-driven repayment and Public Service Loan Forgiveness, which benefits those who work for nonprofits. With barely a month until student loan payments are set to resume, the Department of Education has told servicers not to send new billing statements.īorrowers in default will automatically be given a 'fresh start,' according to a statement from the US Department of Education.

Zack Friedman, CEO of online financial marketplace Mentor, wrote in Forbes that, in theory, 'Biden could continue to extend student loan relief through multiple executive orders, creating a student loan payment pause 'forever.'' 'Maybe the department expects that the White House will yet again kick the can down the road,' Buchanan added. Read more: What Happens to Your Credit Score if Your Student Debt Is Forgiven? 'The situation is that we're almost 30 days away from the planned resumption and the has been telling servicers to hold off on resumption communications for the last few months,' Scott Buchanan, executive director of the nonprofit Student Loan Servicing Alliance, told The Wall Street Journal on July 25. President Biden has not indicated yet whether he will pause student debt payments again, but experts believe it's a serious possibility. Will student loan payments be paused again? 'That additional time will assist borrowers in achieving greater financial security and support the Department of Education's efforts to continue improving student loan programs,' Biden said. In April, Biden extended the repayment freeze once more, pausing payments until Sept.

'Restarting repayment will financially destabilize many borrowers and their families, and will cause hardship for many who could not afford repayment,' the letter read. Elizabeth Warren and other top Democrats called on the White House to extend the moratorium again and provide 'meaningful' debt cancellation. The Biden administration initially warned that the extension through January 2022 would be the last, but with the omicron variant of COVID-19 sweeping through the US last year, Biden decided to continue the moratorium until May 1, 2022.Ī March 31 letter from Senate Majority Leader Chuck Schumer, Sen. Biden has extended the pause four more times since taking office. Trump first enacted the pause on student loans in March 2020 and extended it twice through January 2021. Federal student debt repayments have been paused for more than two years, meaning interest hasn't accumulated and collections on defaulted debts have been put on hold.

Biden pauses student loans