Biden administration extends pause on federal student loan payments through January

The Education Department said Friday it will extend the suspension of federal student loan payments through Jan. 31, 2022, marking the fourth time the agency has given borrowers breathing room amid the pandemic. The Department says it will be the final extension offered to borrowers.

The moratorium was set to expire on Sept. 30, but Congressional Democrats had urged the Biden administration to push back the date as the public health crisis has left many Americans struggling to regain their financial footing. People familiar with the matter who were not authorized to speak publicly said the Education Department had also pressed the White House for a final extension to help borrowers smoothly transition back into repayment.

Those efforts paid off.

"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," Education Secretary Miguel Cardona said Friday. "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 a restart and ensure a smooth pathway back to repayment."

The Education Department said it will begin notifying borrowers about the final extension in the coming days, and provide resources about how to plan for the resumption of payments as the end of the moratorium approaches.

All borrowers with student loans from the Education Department will see their payments automatically suspended until Jan. 31 without penalty or accrual of interest. Each month until then will still count toward loan forgiveness for borrowers in public-service jobs. It will also count toward student loan rehabilitation, a federal program that erases a default from a person's credit report after nine consecutive payments.

Collections on defaulted, federally held loans will still be halted, and any borrower with defaulted federal loans whose wages are being garnished will receive a refund. However, the directive still excludes more than 7 million borrowers whose federal loans are held by private companies or universities.

All told, 41 million Americans will benefit from the continued moratorium, according to the department.