On August 6, 2021, the U.S. Department of Education introduced an extension of the pause on federal student loan funds to January 31, 2022. The fee moratorium, at the moment in impact for hundreds of thousands of federal student loan debtors, was set to finish on September 30, 2021.
The Department famous that this extension could be the final one. U.S. Secretary of Education Miguel Cardona acknowledged: “As our nation’s economy continues to recover from a deep hole, this final extension will give students and borrowers the time they need to plan for restart and ensure a smooth pathway back to repayment.”1
How many fee pauses have there been?
There have been 4 pauses to federal student loan reimbursement because the begin of the coronavirus pandemic. The first pause was instituted in March 2020 for six months (via September 2020) when Congress handed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The second and third pauses got here by way of presidential govt order and prolonged the fee pause via January 2021 and thru September 2021, respectively. The fourth and “final” extension is now scheduled via January 31, 2022. This means federal student loan funds will resume starting February 1, 2022.
The Department of Education will start notifying debtors about this closing extension within the coming days, and it’ll launch assets and details about the way to plan for reimbursement as the tip of the pause approaches.
Does curiosity proceed to accrue throughout the moratorium interval?
No, curiosity doesn’t accrue throughout the moratorium interval. Essentially, the rate of interest is ready at 0%.
Can debtors make funds in the event that they wish to throughout this time?
Yes. Borrowers can select to maintain making their month-to-month student loan funds throughout the moratorium interval if they want. The full quantity of a borrower’s fee shall be utilized to principal. Borrowers also can select to make partial funds throughout this time.
Do non-public student loans qualify for the fee pause?
No, non-public student loans aren’t eligible. Only student loans held by the federal authorities are eligible. This consists of Federal Direct Loans (which incorporates PLUS Loans), together with Federal Perkins Loans and Federal Family Education Loan (FFEL) Program loans held by the Department of Education.
Is student loan forgiveness doubtless when the fee pause ends?
Probably not. While some legislators have gone on document in favor of forgiving a certain quantity of federal student loan debt per borrower, the Biden administration has not taken any steps on this path and has given no indication that it’s going to accomplish that. Borrowers needs to be prepared to start out repaying their loans when the pause ends on January 31, 2022. In the case of continued monetary hardship at the moment, debtors ought to contact their loan servicer to inquire about requesting a person deferment or forbearance.
For extra data, go to the Federal Student Aid web site.
1) U.S. Department of Education, 2021