WASHINGTON — Education Secretary Betsy DeVos on Friday extended the suspension of federal student loan payments through the end of January, giving Congress and the incoming Biden administration time to impose a longer moratorium.
“The coronavirus pandemic has presented challenges for many students and borrowers, and this temporary pause in payments will help those who have been impacted,” DeVos said in a statement Friday. “The added time also allows Congress to do its job and determine what measures it believes are necessary and appropriate. The Congress, not the executive branch, is in charge of student loan policy.”
The payment freeze, which was first imposed in March and later extended, had been set to expire Dec. 31.
Until now, the Trump administration had declined to say whether the president or DeVos would take action to stop millions of Americans from being thrown back into repayment as the economy continues to deteriorate.
In a memo obtained this week by The Washington Post, the Education Department instructed the loan servicing companies that handle payments to delay issuing bills to borrowers until later this month. The advisory, which was first reported by Politico, was designed to ensure payments would not come due until February, according to people familiar with the memo who were not authorized to speak publicly. The Education Department did not respond to inquiries about the strategy.
As with the Trump administration’s last extension of the moratorium in August, the one announced Friday is a continuation of the terms written by Congress earlier in the year. That means all borrowers with student loans held by the Education Department will see their payments automatically suspended until Jan. 31 without penalty or accrual of interest.
Each month until then will still count toward loan forgiveness for borrowers in public-service jobs. It will also count toward student loan rehabilitation, a federal program that erases a default from a person’s credit report after nine consecutive payments.
Lawmakers first suspended education debt payments through Sept. 30 after the Trump administration in March gave borrowers the option of postponing payments for at least 60 days as the pandemic battered the economy.
As the deadline approached and Congress was unable to reach an agreement on an extension, Trump moved the deadline back to Dec. 31. At the time, the president said he would likely extend the moratorium past the end of the year.
Advocacy groups grew concerned as the Trump administration remained quiet on whether the president would keep his word. Seventy-seven civil rights, consumer and student advocacy organizations, including the NAACP and Center for Responsible Lending, penned a letter in October urging DeVos to take action.
“We are glad that Secretary DeVos has heeded this call,” said Alexis Goldstein, senior policy analyst at the progressive Americans for Financial Reform, one of the signatories to the October letter. “But we still need a long-term solution. We look forward to seeing the incoming Biden administration extend the federal student loan suspension even further, ensure all federal student loan borrowers are covered, and provide crucial relief to millions by canceling federal student debt via executive action.”