January 21, 2021

Biden extends student loan payment deferrals until October

Biden extends student loan payment deferrals until October

President Biden has directed the Department of Education to extend the suspension of federal student loan payments and interest.

Payments will not have to be made until Oct. 1 at the earliest, extending the already unprecedented pause on payments by eight months, reported CNN.

Congress had passed a sweeping relief bill that automatically suspended student loan payments and waived interest when the economy began to shut down in response to the pandemic in March.

It was originally set to expire in September 2020, but it was extended by the Trump administration until Jan. 31, 2021.

The pause on payments only applies to federally held loans.

The pause covers roughly 85 percent of all federal student loans, which includes those known as direct federal loans and PLUS loans that parents took out on behalf of their children, reported CNN. The benefit excludes some federal loans that are guaranteed by the government but not technically held by it.

Generally, those loans were disbursed prior to 2010, reported CNN.

Borrowers are still allowed to continue making payments.

Those enrolled in the Public Service Loan Forgiveness payment plan will still receive credit as if they had continued paying, as long as they are still working full time for qualifying employers, reported CNN.

During his campaign, President Biden called for cancelling $10,000 in federal student loans per borrower. On Tuesday, Brian Deese, Biden’s pick to lead the National Economic Council, said that he continues to support Congress passing a bill that would do so.

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