Biden Extends Federal Student Loan Repayment Freeze Thru September

What’s the story?

• President Joe Biden extended the suspension of student loan repayments and the accrual of interest on outstanding loan balances through September 30, 2021, in an executive order signed shortly after he took office on Wednesday.
• Student loan payments were initially frozen under the bipartisan CARES Act, which was signed into law by President Donald Trump in March 2020. 
• The initial freeze ran through September 30, 2020, but the Trump administration extended twice through December 31, 2020 and January 31, 2021.

What does it mean for borrowers?

• Borrowers with student loans that were originated by the federal government and are currently held by the federal government will see their loans temporarily suspended ― interest-free ― through September 30th. Essentially, your student loans will be frozen and prevented from accruing interest until October.
• Eligible loans include all Direct and Direct Parent PLUS loans that were taken out since 2010.
• Most Federal Family Education Loan (FFEL) Program and Perkins loans (which are held by colleges & universities) don’t qualify ― although the roughly 10% of FFEL & Perkins loans that the Dept. of Education purchased during the last recession are eligible.
• If you have eligible student loans, you don’t need to do anything to activate the suspension ― it’s automatically applied by your loan servicer.
• If you’re unsure what kind of student loan you have, you can contact your student loan servicer or check StudentAid.gov to see whether the Dept. of Education is the lender (in which case your loans are eligible).
• If you have eligible loans but want to continue making payments during the suspension period you’re able to do so without “deactivating” the suspension of interest. During the suspension period, all of your payment will be applied against principal.

— Eric Revell

(Photo Credit: Canva.com / zimmytws)