Federal student loan payments suspended until January
Under the measure, students will not be required to make payments and their loans will not bear interest until the end of January.
The Trump administration on Friday suspended all federal student loan payments until the end of January and kept interest rates at 0%, extending a moratorium that began at the start of the pandemic but was due to expire at the end of this month.
By extending payments by a month, the administration effectively leaves it up to the Biden administration or Congress to decide whether to extend longer-term aid to millions of student borrowers. The measure was included in a March relief package and the White House extended it into August, but its fate was uncertain in the deadlock on a new relief bill.
In announcing the extension, DeVos berated Congress for failing to act. “The overtime also allows Congress to do its job and determine what action it considers necessary and appropriate,” DeVos said in a statement. “Congress, not the executive branch, is in charge of student loan policy.”
Under this measure, students will not be required to make payments, their loans will not bear interest, and all collection activity will cease until the end of January.
DeVos has been praised for using her authority to suspend federal student loan payments in March. Congress then cemented the measure into legislation and Trump extended it until December, but the impending deadline fueled fears that millions of borrowers would be forced to resume payments even as unemployment rates rose. sharply.
Last month, the United States Council of Education and dozens of other higher education associations urged DeVos to extend aid, saying the recent surge in COVID-19 cases would likely lead to even more economic turmoil.
“Getting millions of Americans back to repay at the height of this crisis will cause additional financial hardship and force borrowers to make tough decisions about their limited resources,” the groups wrote in a letter to DeVos.
Even DeVos’ own agency has warned of looming problems if the moratorium expires. In its annual report last month, Federal Student Aid, the office that oversees student loans, said without an extension it would face a “heavy burden” of moving millions of borrowers into active repayment at the same time. .
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President-elect Joe Biden did not directly address the moratorium, but called for immediate relief on Tuesday, including “rent and student loan relief.” He also supported proposals to write off up to $ 10,000 in student debt for all borrowers as part of a future virus relief program.
In Friday’s announcement, DeVos said his agency is making efforts to notify loan management companies with which the Education Department has contracted to manage collections. A federal prosecution filed against DeVos in April alleged that thousands of delinquent borrowers continued to get paid despite the mortar. The Department blamed the error on its servers.
DeVos’ Friday release says all defaulting borrowers who continue to have payday deductions will receive repayments.