The Education Department (ED) extended the interest-free pause on federal student loans by one month on Friday evening.
The action, which affects roughly 37 million borrowers, extends the forbearance period and the suspension in debt collections activity set to expire December 31, 2020.
“The coronavirus pandemic has presented challenges for many students and borrowers, and this temporary pause in payments will help those who have been impacted,” DeVos said in a statement. “The added time also allows Congress to do its job and determine what measures it believes are necessary and appropriate. The Congress, not the Executive Branch, is in charge of student loan policy.”
Non-payments will continue to count towards payments borrowers are required to make on their income-based repayment plan, loan rehabilitation agreement, or efforts towards Public Service Loan Forgiveness.
The payment pause has been in effect since March, after executive action by President Donald Trump amid the coronavirus pandemic, and will now end on January 31, 2021 unless extended by the incoming Biden administration.
The protections for federally-held student loans were originally set to expire on September 30, as codified by the CARES Act. ED previously extended that to December 30, 2020, and now to January 31, 2021.
The authority to enact the extensions came under the HEROES Act of 2003, ED stated in Friday’s press release, which allows ED to “set all federal student loan interest rates to zero and automatically enter borrowers into administrative forbearance, allowing them to defer payments without financial penalty.”
Democratic lawmakers have been asking for a longer extension in addition to forgiveness of federally-held student loans.
—
Aarthi is a reporter for Yahoo Finance covering education. Follow her on Twitter @aarthiswami. If you are a student loan borrower who is struggling with your debt and would like to share your experience, reach out to her at aarthi@yahoofinance.com
Read more:
Here's what student debt forgiveness would look like for borrowers and the U.S. government
HEROES Act would cancel $10,000 in student debt for ‘economically distressed’ borrower
Read the latest financial and business news from Yahoo Finance
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn,YouTube, and reddit.
