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Student Loan Payment Freeze Extended Through September 30, 2021

By: Shannon Patterson, CPR, CMSR
Kolbe Certified™ Consultant
Director of Practice Opportunities

Following President Biden’s executive action signed in January, the Education Department extended pandemic relief for about 41 million federal student loan borrowers through Sept. 30, 2021.

In March 2020, borrowers were granted a reprieve on their loan payments and interest was set to 0% and collections of defaulted federal student loans were paused. Congress initiated this relief in the CARES Act. Before Biden’s executive action, the relief was set to expire on Jan. 31.

All of the deadline changes have been challenging for many borrowers. Research from the Pew Charitable Trusts found that 40% of borrowers did not know when their loan payments were set to resume. The research also found that borrowers are struggling financially due to the pandemic: Almost 6 in 10 borrowers with paused payments reported to Pew that it would be difficult to begin making their payments if they had to do so in the next month.

There are still a number of details surrounding student loan repayment that have not been clarified. The Education Department had previously confirmed that borrowers in an income-driven repayment plan would not have to recertify their income before Jan. 31, noting that these borrowers would be notified individually of a new recertification date. However, the Biden administration has not yet addressed how the latest extension of relief may affect that, so it is important for buyers to stay informed. If you’re not sure what types of student loans you have, contact your loan servicer to find out. If you have an online account with your loan servicer, you can also check there to see whether the benefit was applied to your account. To find out what type of loans you have, follow these steps:

  1. Visit gov/login.
  2. After you log in with your username and password (FSA ID), you will be able to see your loan(s) listed on the StudentAid.gov Dashboard.
  3. Click “View Details.”
  4. Scroll down to the “Loan Breakdown” section. If your loan(s) is owned by ED, you will see “DEPT OF ED” before the loan servicer’s name. These are the loans eligible for the 0% interest rate.

The extension of the payment freeze has provided relief to borrowers in the short term and offers a longer runway before repayment starts, but what happens next? Will there be permanent relief with permanent loan forgiveness? Some democratic congress members support a plan to cancel up to $50,000 of outstanding federal student loans per borrower, although Biden’s proposal is only canceling $10,000 in debt for students who work in national or community service. 

Right now, it is unclear what the Biden administration will do next but borrowers should pay attention. Our biggest piece of advice is, if you can afford it, keep making payments or even increase your monthly amount during this period to pay off your loans faster and lower the total cost of your loan over time. 

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