We’re less than two months away from the end of the pause on federal student loan payments, with no decision on widespread student loan debt forgiveness from President Joe Biden. If no action is taken by Biden or Congress, payments on federal student loans, as well as interest on those loans, will start up again on September 1.
The US government has paused payments on federal student loans since March 2020, but the latest extension will expire on Aug. 31. Secretary of Education Miguel Cardona told a Senate subcommittee in June that another moratorium extension remains a possibility.
“I don’t have any information now to share with you about when it would end or what the conversations are about when it’s going to be lifted,” Cardona said. “I know we have a date, and it could be that it’s extended. Or it could be that it starts there. But what I will say is that our borrowers will have ample notice.”
Read more: What Happens to Your Credit Score if Your Student Debt Is Forgiven?
The student loan freeze halts payments and interest for 35 million Americans and suspends collection efforts against the 7 million borrowers currently in default. The moratorium has allowed taxpayers to defer repaying nearly $200 billion, according to an analysis from the Federal Reserve Bank of New York.
Though millions of borrowers have had their student debt canceled during Biden’s term, no official decisions have been made yet on widespread student loan forgiveness. In a June 30 letter, 180 educational, community, legal and financial nonprofits urged Biden to cancel more student loans before payments restarted.
Here’s what you need to know about federal student loan payments, including how long the pause could last, what other benefits it includes and whether Biden will push for more student debt forgiveness.
How long will the pause on student loan payments last?
Federal student debt repayments have been paused for two years now, meaning interest hasn’t accumulated and collections on defaulted debts have been put on hold.
President Donald Trump first enacted the pause on student loans in March 2020 and extended it twice through January 2021. Biden has extended the pause four more times.
The Biden administration had warned that the extension through January 2022 would be the last, but with the omicron variant of COVID-19 sweeping through the US last year, Biden decided to continue the moratorium until May 1, 2022.
Then, a March 31 letter from Senate Majority Leader Chuck Schumer, Sen. Elizabeth Warren and other top Democrats called on the White House to extend the moratorium again and provide “meaningful” debt cancellation.
“Restarting repayment will financially destabilize many borrowers and their families, and will cause hardship for many who could not afford repayment,” the letter said. In April, Biden extended the repayment freeze once more, pausing payments until Thursday, Sept. 1, 2022.
“That additional time will assist borrowers in achieving greater financial security and support the Department of Education’s efforts to continue improving student loan programs,” Biden said.
Will Biden pause student loan payments again?
It remains to be seen whether the president will pause student debt payments by the time Aug. 31 arrives, but Cardona’s testimony in the Senate subcommittee hearing seems to indicate the option is at least on the table.
“Theoretically, Biden could continue to extend student loan relief through multiple executive orders, creating a student loan payment pause ‘forever,'” Zack Friedman, CEO of online financial marketplace Mentor, wrote in Forbes.
Or at least until he leaves office.
What about borrowers who are in default?
Borrowers in default will automatically be given a “fresh start,” according to a statement from the US Department of Education. Their accounts will be returned to good standing and any delinquency will be “cured,” allowing them to repair their credit and gain access to programs like income-driven repayment and Public Service Loan Forgiveness, which benefits those who work for nonprofits.
“During the pause, we will continue our preparations to give borrowers a fresh start and to ensure that all borrowers have access to repayment plans that meet their financial situations and needs,” Cardona said in the statement.
Can Biden forgive more student debt?
While on the campaign trail, Biden said he’d support legislation canceling a minimum of $10,000 of federal loans per borrower. However, the White House has been largely silent on the issue since he took office, though the Department of Education made moves on this front in the last couple of months.
Following the department’s revamp of its Public Service Loan Forgiveness program in October, more than 750,000 borrowers have had their student loans extinguished, collectively reaching more than $18.5 billion of loan discharges as of May.
Then-White House Press Secretary Jen Psaki said in April that the president “has not ruled out” using executive action to cancel substantial amounts of student loan debt.
Whether he has the legal authority to do that without legislation from Congress is still unclear.