Surprisingly, President Biden has announced that the student loan pause will be extended to 2023.
While the offer of federal relief is still pending in court, the Biden administration is extending its student loan repayment pause, which was supposed to expire at the end of this year into 2023.
The previous deadline for the repayment of the student loan was December 30, 2022, and is extended to June 30, 2023, which is a huge relief for students in the USA.
The additional six months of temporary relief were, in the president’s opinion, intended to give “ the Supreme Court the time to hear the case in its current term.”
If the litigation fails, the payments will begin 60 days after June 30 or if the case is resolved, 60 days after the debt cancellation scheme is implemented.
Since the COVID-19 pandemic started in early 2020, borrowers have essentially been released from their responsibility to make payments on federal students loan. Since then, the repayment standstill has been prolonged numerous times, Biden’s previous extension to December 30 was meant to be the final one. But here comes the announcement of the extension of the student loan repayment pause.
“I’m confident that our student debt relief plan is legal. But it’s on hold because Republican officials want to block it,” Biden tweeted. “That’s why [Secretary of Education Miguel Cardona] is extending the payment pause to no later than June 30, 2023, giving the Supreme Court time to hear the case in its current term.”
In August, Biden announced his proposal to forgive up to $10,000 in federal student loans for low-to-middle-income borrowers and up to $20,000 for eligible Pell Grant recipients. However, it immediately met with Republican opposition.
Additionally, a federal judge in Texas declared Biden’s initiative illegal earlier this month. However ‘ the Department of Justice has appealed the declaration. Subsequently, the Department of Education has taken off the federal student debt relief application from the website and has stopped processing any application that has already been submitted by students, while the legality of the president’s plan is determined by the court.
Furthermore, a federal appeals court issued an injunction to Biden’s relief in a different action on behalf of six states, who claimed that financial institutions would suffer if borrowers were not required to pay their existing obligations.
This will be the ninth extension overall since the original federal student loan moratorium was implemented under the CARES Act back in 2020. It will also be the sixth extension during the Biden administration since taking office.
A college education is always the priority of many people, but the expenses are quite threatening for students coming from a low financial background. In Us, students have both private and federal students loan.
Federal student loans are administered by the Department of Education of the US whereas private college loans are administered by many sources such as banks, credit unions, and other financial institutions. A private loan can be used for any of a student’s needs such as tuition, room, books, computers, transportation, and also for other living expenses. But these private loans are not based on the borrower’s financial needs.
Federal student loans tend to have very low-interest rates and they will give the borrower more flexible plans for repayments than private loans. For getting a federal loan a student need to submit the government’s Fee Application for Federal Student Aid (FAFSA).
It will ask some questions regarding students’ and parents’ income and investments. After submitting the application they determine whether the applicant is eligible for getting the loan.
COVID-19 had made these low-middle-class students fall into misery because of financial difficulties. Many students in the US were facing difficulty and for a better future President came up with relief from the loan. But was blocked due to legal restrictions from the Supreme Court.