Student Loans Remain Frozen
This means the earliest resumption of payments for federal borrowers would be February 2022. This extends the final Trump extension which was due to expire next month.
The original payment moratorium emerged from the CARES Act in response to the COVID pandemic’s economic and social impact. The wide ranging law addressed hardships stemming from government mandates shutdowns and the ensuing job losses. The numerous extensions meant millions of borrowers will approach two years without making payments. Of course, the moratorium and extensions mandate borrowers can miss payments without penalty and interest accrual is frozen. However, this applies to Department of Education subsidized loans. Private lenders underwrite millions in student loans which were never put on hold.
So what happens next? President Biden continues to face calls from progressive lawmakers to enforce outright debt forgiveness for all federally backed student loans. The administration is currently researching the possibilities so stay tuned!
I was informed about the process in which Trump froze the student loan interest rates to help aid the overwhelming amount of debt students were racking up, but I had no idea that so called private lenders tend to underwrite millions in student loans that are not frozen. So do this in turn a larger debt for each specific individual taking out student loans?
Though the unprecedented chaos brought on by COVID is an understandable justification for freezing payments, It feels like the freeze might as well never end. At some point, people need to pay for the things they made a deal to pay for, regardless of the circumstances they failed to predict. Does that suck? Yes, but it is a fact of life. The COVID pandemic is almost entirely in the rear view. It is time to move on.