DeVos will suspend payment of student federal loans until January

Collin Binkley
| AP Education Writer

The Trump government on Friday suspended all federal student loan payments until the end of January and maintained a 0% interest rate, extending the moratorium that began early in the pandemic but expired later this month.

By extending salaries by one month, the administration is effectively leaving it to the Biden administration or Congress to decide whether to provide longer-term assistance to millions of student loans. The measure was included in an aid package in March and extended by the White House in August, but its fate was in doubt amid the stalemate in the new aid plan.

When announcing the extension, Secretary of Education Betsy DeVos kept Congress secret because she did not act. “The added time will allow Congress to do its job and determine what action is needed and appropriate,” DeVos said in a statement. “Congress, not the executive branch, is responsible for student loan policy.”

Under the measure, students will not be required to pay, their loans will not charge interest, and all collection activities will cease by the end of January.

DeVos was praised for pausing federal student loan payments in March. Congress later enacted the measure in law and Trump extended it until December, but the imminent deadline sparked fears that millions of borrowers would be forced to resume payments, even as unemployment rises.

Last month, the U.S. Board of Education and dozens of other higher education federations urged DeVos to extend the easing, saying the recent surge in COVID-19 cases is likely to lead to even greater economic turmoil.

“Repaying millions of Americans in the midst of the crisis is causing additional financial hardship and forcing borrowers to make difficult decisions about their limited resources,” the groups wrote in a letter to DeVos.

Even DeVos ’own agency has warned of further threats if the moratorium expires. Federal Student Aid, the office that oversees student loans, said last month in its annual report that without an extension, it will face a “heavy burden” when it moves millions of borrowers with active repayment.

President-elect Joe Biden did not appeal directly to the moratorium, but on Tuesday demanded an immediate exemption, including “rent and student loan exemptions”. He also supported proposals to cancel up to $ 10,000 in student loans for all borrowers as part of a future anti-virus package.

In a statement on Friday, DeVos said its agency is working to notify credit companies that the Department of Education has contracted to manage the collections. A federal lawsuit filed against DeVos in April said thousands of overdue borrowers were still withholding payment despite the mortar. The department blamed the error on its service providers.

DeVos said in a statement on Friday that all late borrowers who continue to withhold their wages will receive a refund.