CARES Act Student Loan Relief Extended Again through January 31, 2022

Editor's Note: Since the writing of this article, the federal student loan payment pause has been extended into 2023 as the Supreme Court decides whether the Biden-Harris Administration’s Student Debt Relief Program can proceed. The U.S. Department of Education announced loan repayments may resume as late as 60 days after June 30, 2023.


On August 6th, the Education Department announced it was extending student loan relief for millions of Americans. In what the department is calling the final extension, the moratorium on federal student loan payments, initially instituted in March 2020, will now continue through January of 2022.

Previously, the payment pause was set to expire on September 30, 2021, after President Joe Biden issued an executive order that extended the CARES Act provision for student loan relief. Now, the payment pause has been pushed through January 31, 2022. For 41 million Americans, this means that they will not be required to pay their federal student loan bill for nearly two years.

What Does This Mean for Student Loan Borrowers?

The extension of the federal student loan payment freeze means that borrowers with federally held student loans do not have to make payments before February 2022. During the pause, interest is set at 0%. That said, borrowers who are able to make payments can do so—and their payments will go toward their principal balance.

With relief now set to extend through January 31, 2022, federal student loan borrowers should remember that the extended pause on payments does not equate to forgiveness. Once the suspension ends, monthly payments will resume.

How Borrowers Can Prepare for Repayment

The new extension may create a dilemma for borrowers who have been considering refinancing while interest rates are at historic lows. On one hand, they may want to continue benefiting from the government’s temporary pause on student loan payments. On the other hand, inflation is on the rise, which means private lending interest rates may soon follow.

If you’re unsure about what’s the right move for you, SoFi may be able to help.

SoFi is offering a new student loan refinancing program that allows eligible federal student loan borrowers to lock in today’s low interest rate and continue to benefit from the federal moratorium. Enrolled borrowers would have their new refinanced loan disbursed on December 20, and their first payment would be due on February 1, 2022. (Please note: interest will begin accruing on disbursement, so borrowers will shorten the period of 0% interest provided by federal student loan relief.)

If they change their mind and decide they no longer want to refinance their federal loan before their refinanced loan is disbursed, borrowers may cancel before December 20 and stay with their federal program. (Borrowers should know that refinancing their federal education debt means forfeiting federal benefits, like income-driven repayment plans, deferment, and loan forgiveness options.) If they want to proceed with the new loan, they won’t need to take any additional action.

Also, federal student loan borrowers can be proactive by communicating with their loan servicer, who can help guide them through this confusing time and provide a refresher on the state of their loans. By taking the time to create a game plan, borrowers can set themselves up to get back into repayment when the payment pause expires.

The Takeaway

The most important thing borrowers can do right now is prepare for the return to making monthly federal student loan payments beginning in February 2022. While the Biden administration has expressed possible support for some portion of debt forgiveness, its plan for student loan debt relief remains unclear. As the new moratorium deadline approaches on January 31, 2022, it’s crucial that borrowers start planning now so they are ready to resume payment when the time comes.

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SoFi Student Loan Refinance
If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.

CLICK HERE for more information.

Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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