The Biden administration has extended the pandemic payment pause related to federally-backed student loan debt to January 31, 2022.
"The payment pause has been a lifeline that allowed millions of Americans to focus on their families, health, and finances instead of student loans during the national emergency,” U.S. Secretary of Education Miguel Cardona stated in a press release. “As our nation’s economy continues to recover from a deep hole, this final extension will give students and borrowers the time they need to plan for restart and ensure a smooth pathway back to repayment."
The payment pause was first enacted by former President Donald Trump in March 2020 and initially extended by President Biden through September 2021.
A source familiar with the decision told Yahoo Finance that the extension is meant to "give borrowers the certainty they need" since the payment pause has largely been open-ended amid the pandemic.
"Giving them a final time would help them make transition and give them time to prepare repayment," the person added, explaining the "final extension" messaging of the statement.
Federal actions amid the pandemic will lead to roughly $100 billion in total student loan forgiveness between March 2020 and September 2021, according to Education Department (ED) data and analysis from experts, providing a financial lifeline to the roughly 45 million student loan borrowers owing more than $1.7 trillion in outstanding federally-backed debt.
Advocates and politicians have expressed deep concern about debtors' ability to repay their loans post-pause. One of the chief concerns is a possible spike in delinquencies and defaults.
If the payment pause ended as scheduled in October, "we are facing a student loan time bomb that when it explodes could throw millions of families over a financial cliff," Senator Elizabeth Warren (D-MA) told Yahoo Finance in May.
The Education Department "will begin notifying borrowers about this final extension in the coming days," the press release added, "and it will release resources and information about how to plan for payment restart as the end of the pause approaches."