Advertiser Disclosure
Student Loan Payment Pause: Biden Approves Final Extension
Updated On September 6, 2022
Editorial Note: This content is based solely on the author's opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.
President Joe Biden has announced his final extension of the student loan payment pause. Here’s what you need to know and what it means for your student loans.
In this article, you will learn:
- Student loan payment pause: the details
- Student loan moratorium: student loan relief
- Student loan forgiveness: how to qualify
- Student loan forgiveness: next steps
Student loan payment pause: the details
Biden has extended the student loan pause for millions of student loan borrowers. Here are the key details:
- Student loan moratorium extended for four more months;
- Student loan payments paused through December 31, 2022;
- Applies to federal student loans only;
- Federal student loan payments will restart on January 1, 2023.
This latest extension represents Biden’s fifth extension of the student loan payment pause. Previously, President Donald Trump extended the student loan pause twice. Biden has informed student loan borrowers that this will be the last extension of the student loan payment pause.
(Learn more: How to pay off student loans)
Student loan moratorium: student loan relief
The student loan payment pause includes several benefits for student loan borrowers, including:
- No mandatory federal student loan payments;
- 0% interest rates on federal student loans; and
- No collection of student loans in default
In March 2020, Congress passed the Cares Act, which is a $2.2 trillion stimulus package. That legislation included historic student loan relief such as the student loan moratorium. Through executive action, Trump and Biden extended student loan relief for more than two years. The U.S. Department of Education estimates that student loan borrowers have saved $5 billion a month during the student loan payment pause.
(Read: When to refinance student loans)
Student loan forgiveness: how to qualify
In addition to pausing student loans, Biden announced historic student loan forgiveness for millions of student loan borrowers. Biden will enact wide-scale student loan forgiveness up to $10,000 for federal student loan borrowers. Student loan borrowers who borrowed a Pell Grant for college are eligible to get up to $20,000 of student loan forgiveness.
To qualify for this historic student loan cancellation, student loan borrowers will need to meet the following qualifications:
- You must be a student loan borrower with a federal student loan that is owned by the U.S. Department of Education; and
- You earned up to $125,000 of annual income (or $250,000 as a married or joint filer) during the Covid-19 pandemic.
Contact your student loan servicer if you’re unsure which types of federal student loans you have. Importantly, FFELP Loans and Perkins Loans not owned by the U.S. Department of Education won’t qualify. Why? FFELP Loans, which are federal student loans issued prior to 2010, are primarily owned by third-party financial investors. Similarly, colleges and universities own most Perkins Loans.
If your income information is on file with the U.S. Department of Education, you could get automatic student loan forgiveness. If you haven’t provided your income information to the Education Department, then you should expect to apply online for student loan forgiveness in the coming weeks or months.
(Learn more: How to pay off $200,000 of student loans)
Student loan forgiveness: next steps
Federal student loan payments will restart on January 1, 2023. Start preparing now for the end of the student loan payment pause. Understand all your options for student loan repayment, including student loan refinancing, income-driven repayment and other options for student loan forgiveness. Find the best ways to save money and pay off student loans faster based on your specific financial situation. Once you do, you’ll be that much closer to financial freedom.
Refinance With SoFi
