The Department of Education (ED) on Friday announced borrowers will receive a one-month extension of the federal student loan administrative forbearance period, the pause in interest accrual, and the suspension of collections activity.
The measures will run through Jan. 31, 2021, ED announced in a news release, providing borrowers with debt relief for an additional month as the forbearance period was set to expire at the end of the year.
“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 Education Secretary Betsy DeVos. “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 month extension means borrowers will have relief in place through the remainder of the Trump administration. Had ED not extended the moratorium, relief for borrowers could have lapsed until President-elect Joe Biden entered the White House on January 20, creating a headache for borrowers, loan servicers, and the department in the interim.
Tens of millions of borrowers entering repayment all at the same time would be a difficult task for Federal Student Aid (FSA) and loan servicers, though it could still pose an issue next month if there is a small window between when the extension is set to expire and when Biden takes office.
Congressional leaders have called on the Trump administration to use its authority to issue an extension as negotiations over year-end spending bills and another federal relief package continue.
FSA is working with federal student loan servicers to notify borrowers of the extension, according to the release. Some borrowers had already received emails letting them know payments were due again in January.
As has been the case throughout the pandemic, non-payments will continue to count toward the number of payments required under an income-driven repayment plan, a loan rehabilitation agreement, or the Public Service Loan Forgiveness (PSLF) program.
Additionally, wage garnishments for borrowers in default will still be discontinued and any borrowers who have their wages garnished will receive refunds.
Publication Date: 12/4/2020