The pause on federal student loan payments and collections will continue through January 31, 2022, the Biden administration announced Friday. 

The move comes after months of mounting pressure from consumer advocates, borrowers and most recently leading members of President Joe Biden’s own party, including Democratic Senators Chuck Schumer and Elizabeth Warren, who had asked the administration to extend the pause through at least March 31, 2022. 

“The payment pause has been a lifeline that allowed millions of Americans to focus on their families, health, and finances instead of student loans during the national emergency,” Secretary of Education Miguel Cardona said in a statement. “As our nation’s economy continues to recover from a deep hole, this final extension will give students and borrowers the time they need to plan for restart and ensure a smooth pathway back to repayment.”

The extension announced Friday marks the fourth time the government has stretched the student-loan payment pause — including on Biden’s first day in office, — which was first put in place in March as a coronavirus relief measure. Each time the threat of new payments loomed, advocates warned that borrowers weren’t financially ready and the student loan system wasn’t logistically ready for payments to resume for tens of millions of borrowers. 

In a press release, the Department of Education described the January deadline as a “final extension,” and said that providing a definitive date for when payments would resume would allow borrowers and those involved in operating the student-loan system to prepare for the return of payments. 

In the past several weeks, the prospect of turning on the entire student-loan system began to look increasingly challenging. One of the three major student-loan servicers — the organizations that manage the repayment process for borrowers — announced last month that it would not accept a renewal of its contract. Another, smaller servicer followed suit a few weeks later. 

That meant that roughly 10 million borrowers would be transitioning to a new servicer around the same time that the organizations were expected to face a crush of calls from borrowers who may have questions or want to adjust their monthly bills as payments resume. 

Financial and administrative headaches for borrowers

That had the potential to create both administrative and financial headaches for borrowers. The pandemic marks the first time the government has turned off the entire student-loan system, but in the past when borrowers have resumed student-loan payments after a more targeted freeze — for example, due to natural disaster, — new defaults spiked.

That’s a sign that borrowers weren’t aware that payments had resumed or had struggled to get into an affordable repayment program in time — a scenario advocates have been worried could repeat itself on a much larger scale when payments resume after the pandemic-era pause ends. 

Advocates have also called on the Biden administration to use the pause period to fix the challenges plaguing the student-loan system, including obstacles borrowers face accessing Public Service Loan Forgiveness and other programs that allow borrowers to have their debt discharged in certain circumstances. 

Already the Biden administration has cancelled more than $1.5 billion in debt for borrowers who were scammed by their schools, but attorneys representing former for-profit college students have called on officials to do more. 

The administration is also still facing pressure to pursue some kind of mass student-debt cancellation. Despite the pressure and a campaign promise to cancel up to $10,000 in student debt as a COVID relief measure, Biden has voiced skepticism of the idea. 

Still, earlier this year, his administration requested a memo from the Department of Education and the Department of Justice to determine whether Biden has the legal authority to take that step. 

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