August 6, 2021 | WASHINGTON, DC — Today, the Biden Administration announced that it would extend the pause on federal student loan payments for tens of millions of Americans. The Department will now pause payments, waive student loan interest, and suspend collections for borrowers through January 31, 2022. This extension gives the Biden administration additional time to fix the broken student loan system and manage the upcoming departure of scandal-plagued federal student loan servicer PHEAA, also known as FedLoan Servicing.
“Today’s announcement is welcome news for tens of millions of student loan borrowers; but now the work on their behalf starts in earnest.
Before the pandemic, our nation was in the midst of a $1.7 trillion student debt crisis with more than 1-in-4 borrowers already struggling. The Biden Administration has five short months to repair this badly broken system. This means ensuring that public servants, borrowers with disabilities, those ripped off by predatory schools, and so many others don’t get bills they shouldn’t have to pay. This also requires immediate action to protect more than eight million borrowers in default from the government’s punishing and unaccountable debt collection machine.
President Biden promised to build back better— and that means ensuring that millions of Americans with student loans are not thrown back into a broken system. Borrowers must be granted the debt relief they deserve. The time for action is now.”
Last month, a coalition of more than 125 organizations called on President Biden to extend the pause on student loan payments until the administration fixes the broken student loan system and delivers promised debt relief to millions of people with student debt.
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Background
On January 21, 2021, President Biden issued an executive action pausing student loan payments, suspending interest charges, and halting debt collection for all student loans owned by the federal government through the end of September 2021. This action continued a pause in student loan payments first initiated by President Trump in March 2020, codified by Congress via the CARES Act, and extended via prior executive actions in August and December 2020. No student loan borrower with a federally-held loan has been required to make a student loan payment since March 2020.
Throughout the history of the federal student loan system, borrowers, including servicemembers, public service workers, defrauded borrowers, people with disabilities, and people with low incomes, have failed to benefit from programs intended to protect them from severe financial hardship. Across the country, millions of these borrowers are forced to shoulder debts that should have been canceled under the law. In November 2020, the SBPC published a roadmap for the Biden Administration to take a series of executive actions and deliver debt relief for millions of student loan borrowers as promised under existing law.