As a parent, one of the most important lessons I have learned is that don’t say something unless you mean it and intend to follow through on it. That appears to be a lesson that the Biden administration and the Department of Education need to learn as well. Back in August, the government announced a four-month extension for the moratorium on collecting student loans. The government went as far as to call it the “final extension.” You see where this is going, right?
Yesterday, the government announced that it is extending the moratorium for another 90 days. Individuals with federal student loans will not have to start repaying them until May 1, the Department of Education announced.
“This additional extension of the repayment 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,” said Secretary of Education Miguel Cardona, in a statement. “As we prepare for the return to repayment in May, we will continue to provide tools and supports to borrowers so they can enter into the repayment plan that is responsive to their financial situation, such as an income-driven repayment plan.”
The moratorium on collecting student loans was announced in March 2020 as the COVID-19 pandemic was hitting the United States. About $1.5 trillion of student loans are not accruing interest and are sitting around, waiting to be collected once the moratorium expires.
Extending the moratorium will help 41 million individuals save as much as $5 billion per month, according to the Education Department.
Consumer advocates praised the announcement, but renewed their calls for additional efforts to either cancel student loan debt or removing all borrowers from default status and giving them a fresh start.
“Restarting federal student loan payments on February 1 would have been a disaster for millions of low-income borrowers across the country, borrowers who are disproportionately women and people of color,” said Abby Shafroth, interim director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, in a statement. “These borrowers have not yet recovered from the pandemic, and their future looks even more uncertain as the impact of the Omicron variant and increasing inflation threatens to further destabilize their finances. Today’s announcement means that these borrowers will not face the devastating collection practices the U.S. Department of Education deploys after a borrower defaults–including seizure of Child Tax Credit and Earned Income Tax Credit payments in tax refunds and siphoning money directly from paychecks and Social Security benefits on February 1, 2022. We hope that the Department and the remaining student loan servicers will take this opportunity to take meaningful steps to fix the student loan system before it is turned back on.”
At least the government didn’t say that this was going to be the final time the moratorium was extended.
