Don’t make those student loan payments just yet!
The Biden Administration is extending the student loan moratorium, which would continue to postpone student loan payments for millions of college graduates. Payments will now be paused through Aug. 31, and interest rates will remain at 0 percent, according to the Associated Press.
The new measure comes almost a month before payments were scheduled to resume again on May 1. Democrats in Congress pled with President Biden to allow borrowers more time to plan for payments, citing inflation and the ongoing COVID-19 crisis.
“It is ruining lives and holding people back,” Sen. Patty Murray said in a statement last month. “Borrowers are struggling with rising costs, struggling to get their feet back under them after public health and economic crises, and struggling with a broken student loan system — and all this is felt especially hard by borrowers of color.”
Students of color are drowning in debt
The student loan debt crisis has had a startling impact on Black and African American borrowers, who typically owe an average of “$25,000 more in student loan debt than white college graduates,” according to the National Center for Education Statistics. Four years after graduation, 48 percent of Black students owe an average of 12.5 percent more than they borrowed, and 29 percent face monthly student loan payments of $350 or more, the organization adds, making it hard to save for a home or future investments. The Brookings Institution also estimates that Black college students can graduate owing an average of $52,726 compared to white college grads, who owe closer to $28,006, according to the data. The extended moratorium will certainly help graduates of color keep a little bit more money in their pockets at least until August.
It’s good news for those enrolled in the student loan forgiveness program
The pause on payments is also good news for those working in the public sector and for law and medical students who are often forced to take out exorbitant amounts of debt to obtain their degrees.
Americans working in public health, education, or special government districts are eligible for federal student loan forgiveness after 10 years of required payments, as long as they work for qualifying employers. People currently enrolled in the program are still receiving credit towards their required payments if they continue to pay down their student loan debt throughout the pandemic.
Democrats are urging Biden to broadly cancel student loan debt
Democratic lawmakers such as Senate Majority Leader Chuck Schumer and Elizabeth Warren have been urging President Biden to pass legislation that would wipe out up to $50,000 worth of student loan debt per borrower through an executive order, but he has yet to follow through.
Last year, the president said he would consider some federal student debt cancellations, like in December, when he nudged Congress to pass a bill that would automatically cancel $10,000 of debt per borrower. However, he did argue that the measure should “exclude high-income borrowers,” CNN noted.