President Joe Biden may pause student loans beyond September 30, although it may be an uphill battle.
Here’s what you need to know—and what it means for your student loans.
At an Education Writers Association conference Monday, U.S. Secretary of Education Miguel Cardona said it’s possible that Biden could pause federal student loan payments beyond September 30, 2021. Here’s the exchange, as shared on Twitter by Politico:
When asked whether federal student loan payments and interest accrual will restart October 1, 2021 or be paused beyond that date, Cardona responded: “We’re looking at it. Obviously we are going to take lead from what the data is telling us and where we are as a country with regards to the recovery of the pandemic. It’s not out of the question, but at this point, it’s September 30.”
What this mean for student loan borrowers
On his first day in office, Biden took executive action on student loans, including pausing federal student loan payments and interest accrual through September 30, 2021. This extended that student loan benefits that Congress passed under the Cares Act, the $2.2 trillion stimulus package, as well as executive action taken by President Donald Trump. The Education Department reported that these actions on student loans collectively have saved student loan borrowers $5 billion per month by not having to pay interest on their federal student loans during the Covid-19 pandemic. If this temporary student loan forbearance expires on September 30, 2021, student loan borrowers will save another $25 billion.
Based on Cardona’s comments, it appears Biden will be data-driven as he shapes his view on student loans and student loan cancellation. Cardona says that Biden will evaluate data, which likely means economic data as well as data on the Covid-19 pandemic, to determine if the pause on student loan payments should be extended. Importantly, Cardona says that as of now, the student loan payment and interest pause will end on September 30, 2021. Of course, there is a possibility that Biden could extend beyond this date, but it appears that it would be an uphill battle based on the statement “it’s not out of the question.” That said, Cardona also implied that the Biden administration will evaluate the data closer to September 30 to get an overall assessment of the economic recovery and the state of the Covid-19 pandemic. Cardona also noted that communication with student loan borrowers in advance of September 30 will be critical to ensure a smooth transition, if the payment pause is not extended.
How this relates to student loan cancellation
There is no direct connection between the pause on federal student loan payments and wide-scale student loan cancellation. For example, Biden could pursue any combination of student loan cancellation and ending or extending the payment pause. Biden has asked the Education Department to analyze his legal authority to enact wide-scale student loan cancellation unilaterally without further congressional authorization. That report, according to White House Chief of Staff Ron Klain, is expected within weeks. Biden supports $10,000 of student loan cancellation, but wants Congress to pass legislation to cancel student loans. The findings and recommendations of the Education Department memo ultimately could help determine whether Biden cancel student loans, or turns to Congress to act.
If the pause on student loan payments is not extended, that means your federal student loan payments will be due starting October 1, 2021. Even if Biden extends the pause on federal student loan payments, the pause will not be permanent. That’s why it’s important to consider these other potential options to save money and get a game plan for student loan repayment: