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President Biden signed an executive action on Wednesday, requesting the Education Department to extend COVID relief for about 41 million federal student loan borrowers through September 30, 2021. Before Biden signed this executive action, the relief was set to expire on January 31, 2021.
The White House official statement said this: “At the request of President Biden, the Acting Secretary of Education will extend the pause on federal student loan payments and collections and keep the interest rate at 0%. Too many Americans are struggling to pay for basic necessities and to provide for their families. They should not be forced to choose between paying their student loans and putting food on the table.”
What you need to know about COVID relief for student loans:
- Federal student loan relief has been extended until September 30, 2021
- This applies to federal student loans (not private loans)
- No student loan payments and 0% interest continue until September 30, 2021
- 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 program
- Paused wage garnishments for borrowers with defaulted federal student loans
- Those who want to make their payments can still do so
What’s been happening with student loans?
In March 2020, because of the economic effects of COVID-19, borrowers were given COVID relief on their federal student loan payments. Interest was set to 0%, payments were paused and collections of defaulted federal student loans stopped. Congress initiated this relief in the CARES Act, and in August President Trump later extended it until December 31. It was further extended to January 31, 2021. This extension to September 30, 2021 is a welcome relief for 41 million borrowers.
This pause affects about 41 million borrowers but research from Pew conducted in August-September found that, among borrowers who said the relief applied to them, about 40% did not know when their loan payments were set to resume. Help us spread the word by sharing this article!
The Snowball team is focused on keeping you informed and helping you make the right decisions for your student loans. Sign up here for our Student Debt Report –– we’ll send you an email whenever there are significant changes in policy.
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