On Friday, Secretary of Education Betsy DeVos announced an extension of the student loan federal forbearance period through Jan. 31, 2021. The relief was originally set to expire on Dec. 31, less than a month away from the inauguration of President-elect Joe Biden.
Here’s what you need to know about the extension and what it means for your student loan payments.
The forbearance period provides relief for federal borrowers
In March, Congress initiated the CARES Act, which granted student loan borrowers a temporary pause on both loan payments and interest accrual. This bill was originally set to expire on Sept. 30, but President Trump enacted several executive orders and memorandums in August, one of which extended the forbearance period until Dec. 31.
Since the CARES Act was put into place, 41 million borrowers have been impacted, with their interest rates set to 0 percent and their payments temporarily halted. Approximately 28.3 million borrowers are currently taking advantage of the payment suspension period, while another 4.6 million have continued making the regularly scheduled payments.
The relief — including the extension — only applies to borrowers with federal student loans. Borrowers with private student loans have yet to receive any standardized relief, leaving them to turn to their lenders for hardship options.
The extension gives Congress some breathing room
“The coronavirus pandemic has presented challenges for many students and borrowers, and this temporary pause in payments will help those who have been impacted,” said Secretary DeVos in a recent press release. “The added time also allows Congress to do its job and determine what measures it believes are necessary and appropriate. The Congress, not the executive branch, is in charge of student loan policy.”
The extended relief gives the incoming Biden administration the time necessary to further extend the forbearance period if it decides to do so. The original expiration date of Dec. 31 could have left student loan borrowers in a confusing time of transition with their payments and interest before Biden assumes office on Jan. 20, since student loan forgiveness policies have been a key part of his campaign.
Biden under pressure to extend relief, enact forgiveness
With the 2020 election season coming to a close, the announcement made by DeVos comes at a time when student loan cancellation and forgiveness is at the forefront of political discourse. Democratic senators such as Elizabeth Warren and Chuck Schumer have put pressure on Biden to enact an executive order to cancel $50,000 of student debt per borrower, but there is no indication that Biden will forgo Congress to do so.
The Biden administration’s student loan proposals — like his proposal to immediately cancel $10,000 of debt for all federal loan borrowers — will greatly depend on who fills the remaining Senate seats at the upcoming Georgia runoff election.
Although DeVos has extended the forbearance period until January, there’s no clear indication of what student loan relief is to come after this period of administrative forbearance is over. As the transition of power takes place, stay on top of your loans and be aware of any potential changes to your student loan payments. Contact your loan servicer for any further information or questions you may have about your current payments and interest.