ED Announces ‘Final’ Extension of Student Loan Payment Pause

By Owen Daugherty and Hugh T. Ferguson, NASFAA Staff Reporters

The Department of Education (ED) on August 6 announced it will extend the pause on student loan payment and interest accrual past its September expiration date.

Following weeks of pressure from top Democrats and advocacy organizations, the pause on payments will now be in place through Jan. 31, 2022.

ED in their announcement referred to the new end date of the benefit as the “final” extension of the payment pause, which has been in effect since the onset of the pandemic and was first implemented by the Trump administration.

“The payment pause has been a lifeline that allowed millions of Americans to focus on their families, health, and finances instead of student loans during the national emergency,” said Education Secretary Miguel Cardona. “As our nation’s economy continues to recover from a deep hole, this final extension will give students and borrowers the time they need to plan for restart and ensure a smooth pathway back to repayment.” 

The extension means tens of millions of borrowers with federally-held student loans won’t have made a payment on their student loans in two years when the latest extension comes to an end amid the coronavirus pandemic.

NASFAA President Justin Draeger applauded the extension in a statement, noting that many borrowers are still grappling with the fallout from the pandemic.

"With the effects of the pandemic ongoing, we welcome today’s announcement on delaying student loan repayment. We urge the Department of Education to begin the work to implement a smooth, efficient on-ramp to repayment now, without further delay. Transitioning millions of borrowers back into repayment cannot be done by simply flipping a switch, and may even require a phased implementation," Draeger said.

He added that ED should utilize the additional extension to ensure borrowers have effective methods to repay their student loans.

“Delays cannot continue indefinitely and we urge the secretary of education to use his authority under this national emergency to streamline repayment processes to the fullest extent possible, with the most beneficial terms and conditions as possible. We look forward to exploring ongoing solutions with our federal partners in the weeks ahead,” Draeger said.

The announcement from ED follows weeks of pressure from top Democrats and advocacy organizations. Sen. Patty Murray (D-Wash.) and Rep. Bobby Scott (D-Va.), chairs of the Senate and House Education Committees, sent a letter to President Joe Biden urging him to extend the payment pause, arguing that borrowers do not yet have the information and support they need to navigate resuming repayment.

Their letter says ED should use the extra time afforded to them through the extension to provide borrowers “with an effective re-entry for repayment.” Much of the reasoning for extending the payment pause has been due to the significant undertaking the servicers are tasked with in communicating with the tens of millions of borrowers in a short period of time to notify them that payments are returning.

“Millions of Americans have been displaced or relocated during the pandemic, but the previous Administration chose not to ensure servicers maintained contact with the vast majority of Borrowers,” the letter stated. “As a result, the Department and servicers likely have outdated contact information for many borrowers, which may prevent those borrowers from receiving the assistance they need, creating devastating consequences for those most in need of support.”

While Murray and Scott called for an extension “until early 2022,” Sen. Elizabeth Warren (D-Mass.) and Senate Majority Leader Chuck Schumer (D-N.Y.) sent a letter earlier this month to Biden urging him to extend the payment pause until March 2022.

“While the economic recovery is in progress, additional financial support is needed by students and families throughout the summer, when eviction and foreclosure moratoriums may lapse, and beyond September, when the extended unemployment benefits from the American Rescue Plan are set to expire,” Warren and Schumer, along with other Democratic lawmakers, wrote.

Top Republicans have balked at the idea of another extension, arguing that further extending the relief is too costly for taxpayers and is “unnecessary.”

Ultimately, the most recent extension will provide servicers more time to ensure a smooth transition to repayment in the coming months and could afford the Biden administration time to enact various student loan reforms it has identified as top priorities before borrowers begin making payments again. 


Publication Date: 8/6/2021

David S | 8/9/2021 10:15:14 AM

Final? Seems to me that if there's one thing we should have learned in the past year and a half, it's don't plan things in advance too definitively. The administration should have just said "we're extending this through 1/31/22" while assessing things carefully along the way. Not only do we have COVID cases on the rise again, we have (so far) two loan servicers who are packing up, necessitating a servicer reassignment for millions of borrowers, something the Department has never had to do before.

Because as a great philosopher once said (about baseball, but I'll apply it here), you can sum up financial aid in one word; you never know.

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