The U.S. Department of Education recently announced a final extension of the student loan forbearance period, which was set to expire on Sept. 30. The payment pause will now last until Jan. 31, 2022. Until then, federal student loan borrowers won’t be required to make interest or principal payments on their balance, and collections on defaulted student loans will remain suspended.
1 current trend within student loans for the week of Aug. 9, 2021
1. Biden extends student loan forbearance period until January 2022
On Friday, the Department of Education announced that it would be extending the break on federal student payments until Jan. 31, 2022. This is the final extension of the pause on payments, which was originally instated by the Trump administration in March 2020 and has been extended multiple times.
As stated in a press release, the department believes that this additional time is necessary for borrowers to plan for the resumption of their payments and will reduce the potential for default and delinquency. The department also said that it will work to ensure that borrowers have a smooth transition come January by improving federal student loan servicing.
“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,” said Secretary of Education Miguel Cardona. “It is the department’s priority to support students and borrowers during this transition and ensure they have the resources they need to access affordable, high-quality higher education.”
How this affects student loans
The Department of Education will start notifying borrowers impacted by the extension in the coming days and will provide resources and information about how to plan for the resumption of payments in January.
Federal borrowers can take advantage of the extension by using the skipped payments to bolster a savings or emergency fund or focus on higher-interest debt, like private student loans or credit card payments. Borrowers may also choose to make interest-free payments to pay down their federal debt faster.
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. As 2021 continues, 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.