The Biden administration gave student loan borrowers an early Christmas giveaway, extending the break in payments until May 1.
“We know that millions of student loan borrowers still face the impacts of pandemic and need more time before resuming payments, ”the president said in a statement released on Wednesday (December 22).
According to the US Department of Education, the extension will allow the administration to determine the impact of the Omicron variant on student borrowers, giving them more time before payments resume.
The department said the hiatus, which was due to end on Jan.31, will help 41 million borrowers save $ 5 billion per month. The administration says it encourages borrowers to use this time to ensure their contact information is up to date and to consider “signing up for electronic debit and income-driven repayment plans to ease a transition into income. softness towards repayment “.
Read more: Student loan payment ‘restart’ puts pressure on paycheck-to-paycheck consumers
The administration’s decision represents a sea change in policy over the past few days.
“We are still assessing the impact of the omicron variant, but a smooth transition to reimbursement is a high priority for the administration,” White House press secretary Jen Psaki said last week.
According to estimates from the Roosevelt Institute, the average federal student loan borrower was paying $ 393 per month in student loan debt before the break.
And as PYMNTS noted earlier this month, recent findings from the New York Federal Reserve show that total household debt exceeds $ 15 trillion, after increasing by $ 286 billion in the last trimester.
Mortgage balances rose $ 230 billion to $ 10.7 trillion at the end of September, while student loan balances rose $ 14 billion.
This all adds up to increased pressure on the paycheck population, which has grown 3%, from 54% to 57%, in recent months.