The current student loan forbearance period will expire on September 30, 2021. However, education Secretary Miguel Cardona has suggested the possibility of a student loan forbearance extension, which would depend on the nation’s economy when student loan payments resume on October 1, 2021.
The economic data towards the end of the forbearance period is most vital, on which President Biden is most likely going to base his final decision. While the Biden administration evaluates its administrative control over extending student loans, the process is ongoing, and new developments continue to occur every week. Here is a look at the most recent updates regarding the suggested student loan forbearance extension.
Democratic lawmakers, by the dozens, signed and sent a letter to the Biden administration calling for an extension of student loan forbearance. Senator Elizabeth Warren, Senator Chuck Schumer, Representative Ayanna Pressley, and Representative Joe Courtney authored the letter requesting the student loan interest and payment pause extension.
The democratic leaders highlighted the necessity of an extension to help borrowers who have suffered the most financial impact over the last year. The letter mentioned that the global pandemic disproportionately harmed women and people of color. These groups of people have been recovering slower, making economic experts deem the situation as the most unequal recession in modern U.S. history.
The lawmakers suggested an extension until March 31, 2022, or until the economy reaches pre-pandemic employment levels. Whichever option turns out to be longer is ideal. The potential extension would give the disproportionately affected borrowers some relief despite the nation’s slow economic improvement.
The Democratic lawmakers also argue that resuming student loan payments in October may do more harm than good for the economy. The experts cited long-term credit damage and financial health damage as potential issues that would result from a possible wave of defaulted student loans when payments resume in October. This issue would also be a problem for lenders who must face the burden of dealing with millions of student loan borrowers entering repayment.
Relatedly, student loan borrower advocates have previously sent matching concerns through a statement to the Biden administration. Their concerns reflect the interests of student loan borrowers who continue to struggle to recover from the pandemic’s impact. At the same time, these advocates cited the potential problems that student loan providers would face during an abrupt resumption of student loan payments.
There is no final decision on a student loan forbearance extension. The Biden administration is currently exercising its administrative powers regarding the potential extension of student loan payments, which will resume on October 1, 2021.
According to Education Secretary Miguel Cardona, an extension on student loan payments is not out of the question. However, President Biden has yet to make a final decision, which he is likely to base on the nation’s economic status toward the end of the current forbearance period.
Meanwhile, Democratic lawmakers and student loan borrower advocates share similar concerns over an abrupt resumption of student loan payments. Accordingly, they requested an extension to benefit the borrowers who have disproportionately suffered the pandemic’s effects. The Democratic lawmakers suggested an extension until March 31, 2022.
While an extension is only a possibility and not confirmed, the current deadline for student loan forbearance is September 30, 2021. Consider looking into your repayment plan options as we keep you posted on the progress of a student loan forbearance extension.