Student loan payment pause extended again, Department of Education announces a reset plan for students in default

Earlier this month, the U.S. Department of Education announced another extension of the federal student loan payment pause. The payments had been set to restart on May 1, 2022, but the pause has been extended until at least August 31, 2022.

The payments were set to restart on May 1, 2022, but the pause has been extended until at least August 31, 2022.

Community Solutions has been tracking this issue as part of its efforts to monitor the activities related to unwinding the public health emergency and how people will be impacted.

Extension intended to help borrowers avoid significant economic hardship

The Department of Education continues to monitor the overall economic and public health landscape as it makes these extension decisions and cited recent data from the Federal Reserve in its decision to extend the payment pause. The report stated that student loan borrowers would face “significant economic hardship” if payments were to resume in May.[1]

A significant development announced along with the payment pause extension relates to student loan borrowers in default or delinquency. The Biden Administration is moving to offer any federal student loan borrower currently in default status a “fresh start,” meaning that when payments do resume, their default or delinquency will be wiped clean and they can enter repayment in good standing.

Community Solutions will continue to monitor this issue as part of its efforts to track and prepare for the public health emergency unwinding.

[1] https://www.npr.org/2022/04/06/1091018301/student-loan-pause-extended