Pause On Student Loan Payments Is Extended Through May 1

The Biden administration on Wednesday extended a student loan moratorium that has allowed millions of Americans to put off debt payments during the pandemic.

Under the action, payments on federal student loans will remain paused through May 1. Interest rates will remain at 0% during that period, and debt collection efforts will be suspended. Those measures have been in place since early in the pandemic, but were set to expire Jan. 31.

President Joe Biden said financial recovery from the pandemic will take longer than job recovery, especially for those with student loans.

“We know that millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments,” he said in a statement.

The omicron variant of COVID-19 that has swept through the U.S. with a fury has lent a new urgency to the question over whether the moratorium would be extended. Administration officials had initially said they expected the January extension to be the last. But even as the economy improves, there are concerns that borrowers are not ready to start payments again. Once the moratorium ends, those who were already behind on payments could have wages and benefits taken away as part of debt collection efforts.

The policy applies to more than 36 million Americans who have student loans that are held by the federal government. Their collective debt totals more than $1.37 trillion, according to the latest Education Department data. About a third of borrowers are in default or delinquency and the average monthly payment is $400 a month.

Education Secretary Miguel Cardona said in a statement that the extension will allow for repayment plans responsive to the financial needs of the students, including an income-driven repayment plan.

The continued pause “will provide critical relief to borrowers who continue to face financial hardships as a result of the pandemic, and will allow our administration to assess the impacts of omicron on student borrowers,” Cardona said.

The Trump administration initially suspended federal student loan payments in March 2020 and later extended it through January 2021. Biden has now moved to continue it twice, and the Education Department raised concerns about the effects of suddenly restarting payments, both for students and administratively within the department.

The extension of the loan moratorium comes as decision whether to erase large swaths of student debt altogether is still on the table.