This story is evolving.
President Joe Biden has extended the student loan break until January 31, 2022.
Here’s what you need to know.
Making a big win for student loan borrowers, Biden provided student loan exemptions to help student loan borrowers in the wake of the Covid-19 pandemic. Here’s what to expect before January 31, 2022:
- No federal student loan payments;
- 0% interest on federal student loans; and
- no default student loan collection
This is Biden’s second renewal of student loan benefits. It originally extended the January student loan exemption by eight months until September 30, 2021. Earlier, President Donald Trump also extended the student loan exemption twice. The first extension was from September 30, 2020 to December 31, 2020, and the second was from December 31, 2020 to January 31, 2021. Congress approved the initial student loan exemption under the Cares Act – a $ 2.2 trillion stimulus package – in response to the Covid-19 pandemic.
Student Loan Borrowers To Receive $ 110 Billion Student Loan Cancellation
By January 31, 2022, student loan borrowers will collectively receive over $ 110 billion in student loan cancellations. Why? The U.S. Department of Education says that as a result of this student loan exemption, federal student loan borrowers are saving $ 5 billion every month during the Covid-19 pandemic from March 2020. With this new fourth month extension, student loan borrowers will receive an additional $ 20 billion in student loan cancellation. Collectively, this means that federal student loan borrowers will receive over $ 110 billion in student loan cancellations, mainly through interest savings.
Student loan payments to resume from February 1, 2022
This is the latest extension of student loan benefits.… So don’t expect another four month renewal early next year. The Biden administration has set a final date of February 1, 2022 for the start of student loan disbursements. This will help provide confidence to student loan borrowers, who will now have approximately six months to plan and renew their student loan repayment. Why did the Biden administration choose February 1, 2022? On December 31, 2021, the two major student loan service providers terminate their service contracts with the US Department of Education. As a result, more than 10 million student loan borrowers will receive a new student loan service in early 2022. To avoid transition issues, the Biden administration wants to wait until February to make sure no student loan borrower is left behind as a result of getting a new student loan provider.