According to an administration official briefed on the situation, President Joe Biden will enable millions of federal student loan borrowers to delay payments until August 31, the latest extension of a financial relief package that began more than two years ago.
The extension, the sixth because the pandemic began, would come less than a month before payments were set to resume, affecting tens of millions of debtors, including 35 million people who have failed to make payments that would otherwise be due.
Student Loan Pause Extended Until August
Since the hold began, 7 million borrowers who have defaulted have been exempt from wage garnishment and other collection procedures. An administration official who was not allowed to speak about the plans before they were publicly disclosed said that the extension was scheduled to be announced this week.
The extension will be excellent news for many who are unable or unwilling to begin paying costs that can run into the hundreds of dollars each month. Americans owe $1.6 trillion in federal student loans, which is more than they owe in auto loans, credit cards, or any other type of consumer debt save mortgages, according to New York Times.
The benefit is accessible for Direct Loans as well as PLUS Loans, which are provided to graduate school students and parents on behalf of their children. Some federal loans, known as Federal Family Education Loans, or FFEL, were not eligible since they were guaranteed by the government but not formally held by it. Generally, they were paid out before 2010.
For people who work in the public sector and may be eligible for federal student debt forgiveness after 10 years, the payment halt is even more important. As long as they are still working full-time for qualified employers, they will receive credit for those ten years of necessary contributions as if they had continued to make them during the pandemic.
According to a recent analysis by the non-profit Committee for a Responsible Federal Budget, the interest and payment freeze will result in debt reduction of an average of $5,500 per borrower from March 2020 to the previously projected expiration date of May 1, 2022, CNN reported.
Biden's Alleged Debt Relief Extension Falls Short
Mostly attributable to the suspension of interest accrual, it has primarily helped physicians and attorneys, who tend to borrow substantial sums of money for their graduate degrees. The study may understate the relief since it ignores the extra advantage of the payment delay for individuals pursuing Public Service Loan Forgiveness.
According to the Committee for a Responsible Federal Budget, the standstill costs the government almost $4 billion every month. Rep. Alexandria Ocasio-Cortez (D-NY) slammed the extension, saying it just serves to prolong the uncertainty that people with thousands of dollars in student debt are experiencing.
On Tuesday, the Democrat firebrand wrote on Twitter, "I think some folks read these extensions as savvy politics, but I don't think those folks understand the panic and disorder it causes people to get so close to these deadlines just to extend the uncertainty."
Rep. Jamaal Bowman (D-NY), a fellow New Yorker, reminded out that during his 2020 presidential campaign Biden vowed to eliminate student loan debt. On Twitter, Bowman wrote to Biden: "You made a promise to the American people and it's time for you to follow through. Cancel student loans and help us unlock a better and brighter future for over 45 million people in this country."
So far, the president has authorized program expansions that have resulted in considerable student loan relief for over 700,000 people, totaling at least $17 billion. Biden's rumored debt relief extension falls short of the hopes of dozens of Democratic senators.
Last week, over 100 members of Congress from the president's party signed a letter encouraging the White House to prolong the moratorium "until at least the end of the year and to offer real student debt cancellation," according to the letter So far, about 8 million jobs have been generated under Biden's administration, indicating a remarkable rebound from the economic slowdown caused by the pandemic, as per Daily Mail.
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