Student Loan Moratorium is Scheduled to End. Here’s Ways to Prepare
Editor’s Note: Since the writing of this article, the Biden administration has extended the pause on federal student loan repayment through December 31, 2022.
Lawmakers and Activists Want Student Loan Debt Pause Extended
The moratorium on paying back federal student loan debt comes to an end on October 1, which means borrowers will have to begin repaying their student debt again. But lawmakers, economists, and nonprofits are concerned that there will be an increase in missed payments and delinquencies.
More than one in four student loans were either in delinquency or in default prior to the pandemic. The COVID-19 pandemic made it even more difficult for millions of people to pay back loans. The looming deadline is prompting some legislators, including Senators Elizabeth Warren of Massachusetts and Patty Murray of Washington, to call on the White House to extend the deadline until sometime in 2022.
White House Considers Extending the Deadline
Lawmakers are not alone in urging the Biden administration to extend the moratorium on paying student loans and accruing interest on the debt. Over 120 organizations including the National Consumer Law Center, the Consumer Federation of America, and the American Civil Liberties Union have asked the White House to keep the moratorium in place until it can fix the student loan system and federal student loan debt.
Education Secretary Dr. Miguel Cardona said he and his team are considering extending the moratorium. Some believe the pause will last through the end of 2021, which would give borrowers more time. But if unemployment continues to decline, the White House may not have as much motivation to extend the moratorium.
Preparing for Payments to Restart
Student-loan borrowers should expect to receive notice from their loan servicers about when their payments will restart during August, as laid out in the CARES Act. Financial advisors say to make sure contact information is up to date with loan servicers and to consider using autopay to prevent any missed payments. If the White House does extend the deadline, it will give borrowers more time before they need to start making payments.
As of now, borrowers should be prepared for the moratorium to end on October 1. Even if the deadline is extended, the pause will come to an end eventually, which means borrowers should begin preparing to make student loan payments again.
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