Borrowers’ balances were effectively frozen for more than a year, with no federal loan payments required since March 2020, when Congress first sanctioned a suspension as part of one of its first major Covid relief packages.
The assistance is even more significant for those working in the public sector and may be eligible for loan forgiveness after 10 years. They still receive credit for those 10 years of mandatory payments as if they kept making them during the pandemic, as long as they still work full time for suitable employers.
Both the pause in payments and the waiver of interest are automatic, but only apply to federally owned loans. This covers approximately 85% of all federal student loans, including what are known as direct federal loans and PLUS loans, that parents borrowed on behalf of their children. It does not include some federal loans that are guaranteed by the government, but do not technically belong to them. As a rule, they were paid before 2010.
More relief is unlikely
But the effort isn’t enough for some Democratic leaders, including Senate Majority Leader Chuck Schumer and Massachusetts Senator Elizabeth Warren, who are calling for a sweeping waiver of $ 50,000 per borrower.
Biden resists calls for debt relief
Since taking office, Biden has provided some loan forgiveness to defrauded borrowers who attended commercial colleges, changing controversial Trump-era policies. The move results in the cancellation of approximately $ 1 billion in student debt. During the pandemic, the administration also refused to process paperwork to obtain permission to forgive loans to disabled borrowers.