Monthly payments for a majority of federal student loans have been suspended since March 2020, when the Trump administration paused them amid the COVID-19 pandemic. Later, the CARES Act continued the same relief through September. In August, Donald Trump signed an executive order that extended the deadline through the end of this year.
The student loan payment moratorium was set to lapse on Dec. 31 until the education department’s recent action. On Dec. 4, the U.S. Department of Education Secretary Betsy DeVos said the COVID-19 pandemic relief for about 42 million federal student loan borrowers would continue until Jan. 31, 2021.
Will student loans be postponed again?
On Dec. 4, the U.S. Department of Education pushed the COVID-19 pandemic-induced halt on student loan payments through Jan. 31, 2021. The accruing interest will also be paused and the department won’t resume collections of defaulted federal student loans until February 2021.
The extension offers 42 million student loan borrowers, including 37 million that haven’t made a payment in months, an additional break as the COVID-19 pandemic continues to slam the U.S. It also fills the gap between the end of the year and president-elect Joe Biden’s inauguration.
How to apply for student loan forbearance
Student loan forbearance is a way to reduce or stop making your payments temporarily. Think about forbearance as a last resort to prevent defaulting on student loans. If you qualify for student loan forbearance, you can pause the payments for up to 12 months at a time. You can apply for an extended forbearance if your economic circumstances haven’t changed after your initial 12 months are completed.
The interest will continue to accrue on your loans when you apply for student loan forbearance. As a result, the cost of your student loan will rise, making it harder to become debt-free. Student loan forbearance is a smarter option if you are facing a short-term emergency like job loss.
If you’re applying for a mandatory forbearance, you must complete the form Student Loan Debt Burden Forbearance Request. For discretionary forbearance, complete the form General Forbearance Request. The forms are also available on the Federal Student Aid website. Submit the form to your loan servicer, along with paperwork to back up your claim.
Will Congress extend student loan forbearance?
The extended reprieve gives the incoming Biden administration the time necessary to further push the student loan forbearance period if it decides to do so. While it seems likely that Biden will further push the student loan moratorium period, it’s not yet certain. Student loan forgiveness and cancellation is at the forefront of political discourse. Senate Minority Leader Chuck Schumer has put pressure on Biden to forgive up to $50,000 of student debt per borrower.
According to a CNBC report, Schumer said, “Ahead of the new administration, the four of us are calling on the president of the United States to take executive action to administratively cancel up to $50,000 of student loan debt, for federal student loan borrowers.” The report added, “He spoke in New York City on Monday, where he was joined by New York Democratic Congressmen-elect Mondaire Jones, Ritchie Torres, and – via an iPad – Jamaal Bowman.” However, there is no indication that the Biden administration will forgo Congress to do so.