On January 21, 2021 by executive order, President Biden continued the suspension of all Federal student loan payments as well as interest until September 30, 2021. With President Biden’s extension, student loan borrowers will be granted a total of 18 months of loan and interest deferment, since payments were suspended since the enactment of the CARES Act in March 2020.
As reported by CNN on January 21, 2021:
Both the pause on payments and interest waiver is automatic, but only applies to federally held loans.
Regardless, student loan borrowers can continue making monthly payments as usual, if preferred, and because the interest is being withheld, then borrowers are essentially paying down the principal of their loans. Thus, for those who can, borrowers will end up paying less total for their loans as interest is compounded for any outstanding balance.
In addition, for borrowers who intend to have their loans forgiven for their full time employment in public service still retain all the benefits of the program, regardless if they make payments or not:
Those enrolled in the Public Service Loan Forgiveness payment plan will still receive credit as if they had continued paying, as long as they are still working full time for qualifying employers.
CNN, January 21, 2021
For the next eight months, win, win and win again for student loan borrowers, as the Federal government continues to underwrite nearly 44 million borrowers.
Yet, given the slow economic recovery, as well as the back and forth “re-opening” then shelter-in-place public health orders, how will borrowers who are now unemployed or underemployed, fulfill their obligation to repay their loans starting on October 1, 2021? Will the economy recover enough from the 3.4% decline in GDP, the largest since 1946, so more workers will return to work?
Or have we just kicked the can down the road, so to speak? Or will the can-kicking stop should President Biden decide to forgive the balance of student loans? We’ll know more soon.
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