The student loan moratorium that allows borrowers to temporally stop making payments on such loans has been extended through May 1. This marks the third extension provided by the Biden administration, which made the most announcement on Dec. 22.
The student loan moratorium started in mid-March 2020 to coincide with the COVID-19 pandemic-related challenges faced by the public. Borrowers rejoiced as the order suspended federal loan payments, froze interest rates on loans accumulating interest and halted collections on defaulted loans.
Almost 9 of 10 surveyed said not ready to resume payments
The program helped an estimated 41 million borrowers. It allows people with student loan debt to be more deliberate with their money when many had lost their jobs. In addition, it was meant to provide more time for student borrowers to plan a smooth transition toward repayment.
However, a survey conducted in November by the Los Angeles-based nonprofit Student Debt Crisis Center revealed that 89% of the nearly 34,000 respondents claim they are not financially secure enough to resume making student loan payments.
Three extensions made
Since the program began, the Biden Administration announced three extensions in January, August and in December of this year.
Student loans are among the debts that remain after someone files for bankruptcy. However, in extreme situations, student loan debt may be discharged, but, usually, if courts determine that it causes “undue hardship” to the person in debt and his or her dependents.
Getting back on track
Many borrowers breathed a sigh of relief upon hearing the Biden administration’s announcement of the extension through the spring. But borrowers also understand that they must be prepared to get back on track toward making timely loan repayments.