Department of Education extends pause on student loan collections

by Eugénie Budnik SENIOR STAFF WRITER

Last week the United States Department of Education announced an extension of the pause on student loan repayments, interest and collections through Aug. 31 of this year.

The extension of the pause on repayments will allow borrowers additional time to plan for the continuation of payments after Aug. 31.

This additional time will allow the Biden administration to reassess the financial situation of the American economy and how students are being impacted by rising prices and inflation.

The newest extension will be the seventh time the pause on student loan repayments has been extended since March 2020.

Student loan repayments and interest payments were initially paused in March 2020 with the passing of the CARES Act to alleviate economic struggles brought about by the COVID-19 pandemic.

“As I recognized in extending the COVID-19 national emergency, we are still recovering from the pandemic and the unprecedented economic disruption it caused,” President Biden said, in a statement released by the White House on April 6. “If loan payments were to resume on schedule in May, analysis of recent data from the Federal Reserve suggests that millions of student loan borrowers would face significant economic hardship.”

The date in which student loan repayments will restart after Aug. 31 varies across financial institutions.

The United States Department of Education has extended student loan repayments through Aug. 31.

Photo courtesy of Freepik

Sallie Mae, a company which specializes in private student loans and financial planning, has stated the first date of repayment once the pause ends will vary from customer to customer for their institution.

Sallie Mae also advises customers not to ignore repayment notices once the pause ends, as doing so could lead to serious legal action including being reported to the credit bureaus, the entire unpaid balance being due at one time, and the withholding of the wages which will be sent to the loan provider.

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