Student loan payment break could be extended past May
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Good news for the 37 million Americans who mark May Day on their calendars with a skull and crossbones: the Biden administration has signaled the possibility of a new extension freezing federal student loan payments.
- The Department of Education emailed companies that handle federal loans and told them not to remind borrowers that payments would start again in May.
- White House Chief of Staff Ron Klain hinted another extension was possible on Pod Save America.
If the student loan freeze was a band, this would be its sixth consecutive recall, which might have you wondering, “Why not turn this thing into a residence hall?” The legislation has saved federal student borrowers about $195 billion since it was implemented at the start of the pandemic, according to a new report from the Federal Reserve Bank of New York.
If the forbearance were to end, New York Fed researchers predict a sharp increase in defaults. As the midterm elections approach, Democrats have urged Biden to follow through on his campaign promise to forgive a “minimum of $10,000” in student loan debt per person — or at least extend the freeze.
However, not everyone celebrates. Private lenders, whose profits were squeezed during the moratorium, aggressively lobbied the administration to restart payments or reduce the freeze to cover fewer borrowers.MK