WASHINGTON– The Trump administration on Friday suspended all federal student loan payments through the end of January and kept interest rates at 0%, extending a moratorium that started early in the pandemic but was set to expire at the end of this month.
By extending payments by one month, the administration is effectively leaving it to the Biden administration or Congress to decide whether to provide longer-term relief to millions of student borrowers.
“The federal government isn’t well set to have millions and millions of payments flip back on right away,” said Robert Kelchen, Associate Professor of Higher Education at Seton Hall University. “They’ve never done that before and it would just overwhelm their infrastructure.”
Education Secretary Betsy DeVos originally paused federal student loan payments in March. Congress later cemented the measure in legislation and Trump extended it through December, but the looming deadline stoked fears that millions of borrowers would be forced to resume payments even as unemployment rates soared.
President-elect Joe Biden has not directly addressed the moratorium but on Tuesday called for immediate relief including “relief from rent and student loans.” He has also supported proposals to erase up to $10,000 in student debt for all borrowers as part of a future virus relief package.
Kelchen expects the payment suspension to be extended well into 2021, once Biden administration takes office.
“The likely outcome at this point is suspending through the end of September, if not further. Some of the more progressive groups are trying to push the Biden administration to cancel at least $10,000 of student loan debt, if not up to $50,000 and it may be a while before payments resume, even if student debt isn’t partially canceled.”