Student loan borrowers are granted at least one more month’s grace period.
The Ministry of Education announced on Friday that Education Minister Betsy DeVos has extended the coronavirus freeze on payments and collections of student loans until January 31, 2021. The measure, which was initially due to expire on December 31, has imposed payments and collections on some federal student loans. In addition, interest rates on the debt were set at 0% during the freeze.
These measures will remain in effect until January 31, according to a press release. The office of Federal Student Aid, the unit within the Department of Education that administers the student loan program, is currently working with student loan companies to notify borrowers that the payment break has been extended, the release said.
In recent weeks, borrowers, student loan companies, and lawyers had grown increasingly concerned about the prospect of reviving the entire student loan system amid the still widespread economic vulnerability.
In addition, the initial timing of December 31 posed particular challenges. First, it meant payments would resume after the holidays, a time when borrowers are less likely to focus on the paperwork needed to sign up for a manageable student loan repayment plan and when they face added pressure on their budget.
Additionally, there was a possibility that the government would resume student loan payments on Jan. 1, but Biden’s administration would restore the payment freeze after taking office Jan.
With Friday’s announcement, whether borrowers should resume payments have been dropped for another month, amid news that stimulus talks in Washington are gaining momentum.
A coalition of consumer, civil rights and student organizations wrote to DeVos in October, asking her to extend the payment break to September 2021. In a statement announcing the extension, DeVos said the approach to student loan relief should ultimately rest with Congress.
“The coronavirus pandemic has presented challenges for many students and borrowers, and this temporary interruption in payments will help those affected,” DeVos said in the statement. “The extra time also allows Congress to do its job and determine what action it deems necessary and appropriate. Congress, not the executive branch, is responsible for student loan policies. “
In recent months, lawyers and some mainstream Democrats have urged President-elect Biden to cancel at least some of the student debt, arguing that the executive has the legal authority to do so. The Fox criticized the notion of the student debt cancellation earlier this week, calling it ‘wrong’.