Federal Student Loan Payment Pause Extended Until May 1st, 2022

Student Loans

Since March 2020, federal student loan borrowers have benefited from total forbearance on monthly payments due to the COVID-19 pandemic. Many borrowers have had more room to breathe (financially, that is) for nearly the past two years. This has meant more time to save money, invest money and pay down other debt.

Fortunately, federal student loan borrowers can celebrate once again: the current student loan administrative forbearance has been extended through May 1st, 2022. The original date for student loan payments to resume was February 1st, 2022. This means that borrowers have an additional 90 days to get their finances in order before the payments resume this spring (woohoo!).

Citing the Omicron variant as the reason for the extension, the Biden administration has decided to pause payments once again. Millions of borrowers have been adversely affected by the pandemic and the rapidly spreading Omicron variant has only made matters worse.
Let’s take a look at what updates have been circulating from Congress and how it led to the new extension on the payment pause.

Congress Puts Pressure on Biden

Forbes explains that three members of Congress had been petitioning the White House to make sure there would be another extension on the current payment forbearance.

Senate Majority Leader Chuck Schumer (D-NY), Sen. Elizabeth Warren (D-MA), and Rep. Ayanna Pressley (D-MA) all petitioned for an additional extension on the student loan payment pause.

If student loan payments were to restart on February 1, 2022 as originally planned, these members of Congress said that:

  • Student loan borrowers are still not financially secure due to the COVID-19 pandemic, particularly with the emergence of the highly contagious Omicron variant.
  • Nine million student loan borrowers in default could be subject to wage garnishment and other debt collection methods should they be financially unable to resume their payments.
  • Black and Latinx households would face a disproportionate burden from quickly resuming student loan payments.

Luckily, it seems like pressure on the White House from these key political figures may very well have played a role in the announcement of the payment pause.

Are Borrowers Ready to Begin Repayment?

The short answer is no. According to the Student Debt Crisis Center, a nonprofit organization focused on student loan debt, a whopping 89% of fully employed student loan borrowers said they are not financially secure enough to resume payments. Hopefully, the extra 90-day pause will allow borrowers to prepare for their monthly payments once again.

Here are some other statistics about student loans and repayment from the nonprofit’s survey:

  • 21% said they will never be financially secure enough to make any student loan payments again.
  • 27% of respondents say that at least one-third of their income will go toward student loans when payments resume.
  • 10% of respondents say at least half of their income will go toward student loan payments.
  • 44% of fully-employed student loan borrowers said they cannot afford their monthly student loan payments or are in student loan default; and
  • 45% of respondents say their financial wellness is currently poor or very poor compared with 25% who said the same before the COVID-19 pandemic.

Is Total Student Loan Forgiveness Possible?

While there has been some $11B of targeted student loan forgiveness that’s taken place within the past year, only specific borrowers have benefited. If you fall into one of these categories, you just might be eligible for total forgiveness:

  • Borrowers who attended now-defunct schools
  • Borrowers with complete and permanent disabilities
  • Borrowers who are public servants, such as teachers, firefighters, or social workers, under the Public Service Loan Forgiveness program (PSLF)

Progressives in the House of Representatives like Alexandria Ocasio-Cortez (D-NY) and members of the Senate like Elizabeth Warren (D-MA) are pushing Biden to make good on his campaign trail promises to cancel up to $10,000 per borrower, regardless of employment or socioeconomic status. So far, we haven’t seen any action by the Biden administration to make this happen.

The Bottom Line

With the uncertainty of the Omicron variant still swirling around, an additional extension on the existing COVID-19 student loan payment forbearance is certainly welcomed by millions of borrowers.

With just days to go until the new year, there’s no telling what might happen with the evolution of this pandemic. There are many Americans who are still facing financial hardship from the onset of the pandemic in March 2020. Is yet another extension on the student loan payment pause possible? We’ll find out!

Our advice? Prepare yourself and your finances now for payments to resume on 5/1/22. We will be sure to update this article below should any new developments arise!