Biden administration to extend student loan repayment pause until the end of August

By Phil Mattingly, CNN

(CNN) -- The Biden administration is planning to extend a pause on federal student loan repayments through August 31, according to an administration official familiar with the matter.

The repayment freeze, which has been in place since the beginning of the pandemic, was scheduled to expire on May 1.

The administration is expected to announce the extension on Wednesday, the official said.

Borrower balances have effectively been frozen for more than two years, with no payments required on most federal student loans since March 2020. During this time, interest has stopped adding up and collections on defaulted debt have been on hold.

Both Biden and former President Donald Trump have taken actions to extend the pause. Biden had previously moved the payment restart date on multiple occasions, but the administration has said at the time that this would be the final extension.

Direct Loans as well as PLUS loans, which are available to graduate school students and parents on behalf of their children, are eligible for the benefit. Some federal loans that are guaranteed by the government but not technically held by it, known as Federal Family Education Loans, or FFEL, did not qualify. Generally, those were disbursed prior to 2010.

The relief is even more significant for those who work in the public sector and may be eligible for federal student loan forgiveness after 10 years. They are still receiving credit toward those 10 years of required payments as if they had continued to make them during the pandemic, as long as they are still working full time for qualifying employers.

Borrowers will receive a billing statement or other notice at least 21 days before their payment is due, according to the Department of Education. Those who had set up auto payments may need to notify their loan servicing company they want those to continue.

If federal student loan borrowers can no longer afford their monthly payment, they may be eligible for an income-driven repayment plan. Under those plans, which are based on income and family size, a monthly payment can be as low as $0 a month.

This is a breaking story and will be updated.

The-CNN-Wire
™ & © 2022 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.