Biden administration extends break on federal student loans

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Biden administration extends hiatus on federal student loan payments one last time until Jan.31, says CNN .

The pandemic relief benefit was due to expire on September 30 after an unprecedented 19-month suspension. The freeze was initially put in place by Congress and then extended by the Trump and Biden administrations.

“As our country’s economy continues to recover from a deep hole, this latest extension will give students and borrowers the time they need to plan for the restart and ensure a smooth return to repayment,” said Education Secretary Miguel Cardona in a statement.

Borrower balances have effectively been frozen for over a year, no payments are required on federal loans since March 2020. Meanwhile, interest has stopped accumulating – saving the average borrower about $ 2,000 in the first year – and collections for default. the debt has been suspended.

The relief is even greater for those working in the public sector and may be eligible for loan forgiveness after 10 years. They still receive credit for those 10 years of required payments as if they had continued to make them during the pandemic, as long as they are still working full-time for eligible employers.

Biden forgives $ 1.5 billion in student debt for for-profit school fraud victims.

The pause on payments and the interest waiver are automatic, but only apply to loans held by the federal government. This covers about 85% of all federal student loans, including those known as Federal Direct Loans and PLUS Loans that parents take out on behalf of their children. It excludes certain federal loans that are guaranteed by the government but are not technically owned by it. In general, these were disbursed before 2010.

The move comes after leading Democratic lawmakers have put pressure on Biden to prolong the relief. Senate Majority Leader Chuck Schumer of New York and Senator Elizabeth Warren of Massachusetts led a group of more than 60 other Democrats in asking the president in a letter sent in June to push back the restart date, warning that it could “create a major brake on our economic recovery.”

Schumer and Warren also led the charge in pressuring Biden to go even further, urging him to write off $ 50,000 in student debt per borrower.

Biden, who said during the presidential campaign that he would support the cancellation of $ 10,000 per borrower, has repeatedly resisted pressure since taking office, arguing that the government should not cancel the debt of people who went to “Harvard, Yale and Penn”.

From now on, he asked Cardona, his secretary of education, to write a note on the legal authorities of the executive to cancel the debt. It would be an unprecedented decision, but a note lawyers from Harvard Legal Services Center and its Predatory Student Loans Project, says the Education Department has the power to do so.

Since taking office, Biden has written off about $ 1.5 billion in debt for borrowers who were ripped off by their for-profit colleges. The forgiveness process for these borrowers has been in place for years, but cancellations were halted under the Trump administration under then Education Secretary Betsy DeVos, who attempted to change the rule.

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