The federal government has offered several “pauses” for those with student loans during the pandemic. On Wednesday, President Biden announced that the initial freeze, which was to be lifted on January 31, 2022, will be extended through the end of April. In doing so, President Biden has extended the current pause until May 1.
As Biden made the announcement, he stated the freeze would be extended, ” . . .as we manage the ongoing pandemic and further strengthen our economic recovery.” This announcement comes as the White House has announced measures to help manage the latest variant of the Coronavirus, the Omicron variant. Earlier this week, President Biden announced that a website would be available soon so that Americans can request at-home testing kits, delivered free of charge to the public. Other measures include increased availability of the vaccine across the country. On Wednesday, the FDA approved an oral medication meant to stave off the worst effects of the COVID-19 virus. However, many of these measures will not be readily available to the public until after New Year’s.
Biden’s announcement means that borrowers now have an additional ninety days to prepare for upcoming student loan payments. During this time, no interest will accrue on their balances.
On Wednesday, Biden related, “While our jobs recovery is one of the strongest ever . . .we know that millions of borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments.”
Biden has been reluctant to change the original delay date, which was February 1. However, a number of prominent Democrats urged President Biden to do so.
Among many progressive Democrats who have requested that Biden consider extended the freeze are Senate Majority Leader Chuck Schumer (D-NY), Senator Elizabeth Warren (D-MA), and Representative Ayanna Presley (D-MA). These Congresspeople have been outspoken about extending the student loan payment pause.
Progressive Democrats cheered the President’s decision: “Extending the pause will help millions of Americans make ends meet, especially as we overcome the Omicron variant.”
Biden assured Americans that over the next months the Department of Education will continue to work with borrowers who still may be feeling financial effects of the pandemic. However, during this time, borrowers with the ability to pay may want to take advantage of the zero interest period to pay down their principal balance, a move that could help borrowers to save more money in the long run.
A recent survey of borrowers found that almost 90 percent of those with student loans are not yet prepared to resume making payments, some of which are upwards of $400 per month.
Refinancing options exist, but borrowers should keep in mind that refinancing will negatively affect the borrower’s ability to apply for government assistance programs that are income-driven, such as administrative forbearance and student loan forgiveness programs.
Those with student loans may explore their options for refinancing at sites such as Credible; the process is free, and it will not impact the borrower’s credit score.
