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Last week, the Biden administration announced an extension to the student loan payment pause, moving the expiry date from May to August. Here’s what you need to know about this week’s news and how it could impact your student loans.
1 current trend within student loans for the week of April 11, 2022
1. Biden administration extends federal student loan payment pause through August
The Biden administration announced last week that it has officially extended the federal student loan payment pause through Aug. 31, 2022. This extension gives federal student loan borrowers an extra four months of breathing room.
Federal student loan payments and interest accrual will continue to be stalled through August, as will collections activities on defaulted loans. The Education Department made it clear in a press release that the extension is necessary to “allow for a responsible phase-down of pandemic relief.”
The department also stated that it will allow federal student loan borrowers with defaulted student loans or delinquent payments to reenter repayment in good standing and promised that it will use this time to improve federal servicer accountability.
How this affects student loans
Borrowers can continue to pause their federal payments through Aug. 31, though they can also choose to make interest-free payments — doing so reduces the total principal balance once interest begins to accrue again in September. Federal borrowers who choose not to make payments should establish a repayment plan and research all of their relief options in advance of the August deadline.
Here’s how you can get prepared
Whether you’re new to student loans or well into repayment, it’s wise to stay informed about how your student loan rates could change. During 2022, more opportunities for cheaper loans or loan forgiveness could open up; keep an eye on the Bankrate student loans news hub for the latest trends.