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Who is Benefitting from the Extension on Federal Student Loan Payments?

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The US government has further planned an extension of the moratorium on federal student loan payments through 31 Aug 2022. For millions of American students, student debt limbo will continue another three months.

 

Federal Student Loan Payments

 

The extension of the moratorium on federal student loan payments will mark the fifth extension since the pause took effect in March 2020. This time, inflation is climbing and gas prices are soaring in connection to Russia’s invasion of Ukraine. All the while, the nation’s $1.7 trillion student loan debt portfolio continues to grow, with no firm direction for the indebted.

The freeze saves 41 million borrowers about $5 billion a month, the Education Department has said previously. Though borrowers likely will appreciate the extra wiggle room, many have grown frustrated with the continued extensions without a plan for widespread forgiveness. Both conservative and liberal politicians are expected to pan the Biden administration’s actions.

 

Pleas for Further Extension

 

Recently, dozens of Democratic lawmakers sent a letter to the president urging him to extend the pause through year's end and to provide meaningful student debt cancellation. The government has pushed back the restart of student loan payments multiple times, as he spars with Democrats over the best course of action for the nation's tens of millions of borrowers. Meanwhile, borrowers are getting more insistent in their pleas for widespread loan forgiveness.

Borrowers at the demonstration said the payment pause helped them, but they wanted long-term cancellation. They said the repeated extensions make it difficult for them to plan. Regardless of when the student loan payments restart, the government is expected to face challenges in getting borrowers to resume their payments.

 

The At-risk Group

 

The at-risk group includes people who were delinquent on their loans before the pause, those who dropped out of college and graduates within the last three years who haven’t had to make any loan payments, thanks to the freeze.

Though it remains unclear if the president ultimately will erase student loan debt en masse, the Education Department has taken some steps to offer borrowers permanent relief. The agency is on track to cancel more than $17 billion owed by borrowers since Biden took office. That forgiveness has come through expansions of existing debt forgiveness programs, such as those for borrowers who have permanent disabilities or were defrauded by their schools.

 

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