Personal finance

Education Department Extends Student Loan Payment Pause for 42 Million Borrowers Amid Covid Crisis

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  • The payment pause for student loan borrowers will be extended for another month, the U.S. Department of Education announced on Friday evening.
  • The department said it would also continue to halt collection activity until next year.

U.S. Department of Education Secretary Betsy DeVos announced on Friday that the payment pause and interest waiver for student loan borrowers will be extended through the end of January.

The department said it would also halt collection activity on federal student loans, including garnishing wages and Social Security checks, until next year.

The 42 million Americans with federal student loans were offered a break from their monthly bills in March, as it became clear that the coronavirus pandemic would drive up unemployment. That relief was set to expire in September, but President Donald Trump signed an executive order in August that continued the interest-free reprieve until the end of December.

Now federal student loan borrowers don't need to resume making their monthly payments until February 2021. The average student loan bill is around $400 a month.

"The coronavirus pandemic has presented challenges for many students and borrowers, and this temporary pause in payments will help those who have been impacted," DeVos said in a statement.

The secretary also suggested the measure might not be the end of relief for people with student debt amid the crisis.

"The added time also allows Congress to do its job and determine what measures it believes are necessary and appropriate," DeVos said.

It remains uncertain if the payment pause will be extended beyond January 2021.

The vast majority, or around 90%, of federal student loan borrowers have taken advantage of the government's option to pause their payments during the pandemic, data shows.

In a recent Pew survey, 58% of student loan borrowers report that it would be difficult for them to resume making payments in the coming month.

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