*United States President Joe Biden is extending the suspension on Federal student loan payments and interest accrual through August 31, 2022, in a move to allow borrowers to get their financial life back on track while supporting the Department of Education’s efforts to continue improving student loan programmes

Isola Moses | ConsumerConnect

As part of measures the American country is adopting to return to normalcy in view of the COVID-19 pandemic, President Joe Biden is extending the suspension on Federal student loan payments and interest accrual through August 31, 2022.

ConsumerConnect learnt the student loan repayments, originally, had been paused until May 1 this year.

President Biden in a statement noted that the country is still trying to recover from the COVID-19 pandemic, and not everyone has had the opportunity to completely regroup.

He stated: “More than 217 million Americans are now fully vaccinated, and 2 out of 3 eligible adults are boosted. We have the tools we need to move forward safely and return to more normal routines.

“However, as I recognised in recently extending the COVID-19 national emergency, we are still recovering from the pandemic and the unprecedented economic disruption it caused. “If loan payments were to resume on schedule in May, analysis of recent data from the Federal Reserve suggests that millions of student loan borrowers would face significant economic hardship, and delinquencies and defaults could threaten Americans’ financial stability.”

Recall economists, March 2022, said the end of the student loan moratorium would result in a rise in loan delinquencies in the country.

More time before payments resume

President Biden in the statement also said that the extension of the moratorium would allow borrowers to get their financial life back on track while supporting the Department of Education’s efforts to continue improving student loan programmes.

As part of this transition, the Department of Education stated that it will offer additional flexibility and support for all borrowers.

Officials said the chief benefit for borrowers would be extra time to plan for the resumption of payments.

They hope that extra time will help reduce the risk of delinquencies and defaults after the restart.

Between now and August 31, the Department will attempt to refine the programme so borrowers can smoothly transition back into a repayment plan.

The US Department of Education further stated: “This includes allowing all borrowers with paused loans to receive a ‘fresh start’ on repayment by eliminating the impact of delinquency and default and allowing them to reenter repayment in good standing.”

Using extra time to focus on other goals

Department of Education officials as well said they will also be using this extra time granted by the extension to work on several other goals. Some of those include the following:

Helping consumers who were defrauded by their institutions and those eligible for relief through the Public Service Loan Forgiveness programme.

Establishing new partnerships to guarantee that borrowers who are working public service jobs are automatically credited with progress toward forgiveness.

Cutting out extra hoops that borrowers have to jump through to get assistance.

More information about the payment pause and support for borrowers can be found at: StudentAid.gov.