The Administration chaired by Joe Biden plans to delay the payment of student debt acquired with the federal government until August 31, extending a moratorium that has allowed millions of Americans to postpone payments on their loans due to COVID-19, according to White House officials with knowledge of the matter told several media outlets.
Payment of student debt was scheduled to resume from May 1, after it was suspended due to the pandemic.
But the White House has decided to postpone it, after
Democrats in Congress demanded more time for people to prepare their payments.
White House press secretary Jen Psaki declined to go into detail when asked about the matter by reporters on Tuesday.
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“Obviously, we look at and assess what the needs are of people affected by student loan repayment,” Psaki said.
"I'd like to point out that no one has had to pay a single cent on federal student loans since the president took office," he added.
Students walk on the campus of the University of Pennsylvania, on October 21, 2020. Gene J. Puskar / AP
The action will benefit more than 43 million,
who have a student debt contracted with the federal government of 1,600 million dollars in total, according to figures from the Department of Education.
Among those are more than 7 million borrowers who have defaulted on their debt, meaning they are at least 270 days behind on their payments.
Those with loans will not be required to pay them off before August 31, and during that period
interest rates will remain at 0%.
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The media company Bloomberg was the first to report the extension.
When this decision was made, there was a lot of concern that many Americans would fall behind on their payments if they restarted in May.
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In March, the Federal Reserve Bank of St. Louis warned that resuming loan payments could place a heavy burden on borrowers facing financial difficulties during the pandemic.
He explained that the impact would be hardest on black families
, who are more likely to rely on student loans to pay for college.
“Serious student debt delinquency rates could return from record lows to previous highs, when 10% or more of debt was past due,” the bank said.
The Trump Administration authorized the student debt default in early March 2020 and Congress endorsed it shortly after.
The Biden Administration then extended the payment pause two more times.
With information from
The Associated Press
.
