The U.S. Department of Education has announced a final extension of the pause on student loan repayment, interest, and collections through December 31, 2022. Borrowers need to plan to resume payments in January 2023.
While the economy continues to improve, COVID cases remain at an elevated level, and the President has made clear that pandemic-related relief should be phased out responsibly so that people do not suffer unnecessary financial harm.
To address the financial harms of the pandemic by smoothing the transition back to repayment and helping borrowers at the highest risk of delinquencies or default once payments resume, the Department will provide targeted student debt cancellation to borrowers with loans held by the Department of Education.
Borrowers with annual income during the pandemic of under $125,000 (for individuals) or under $250,000 (for married couples or heads of households) who received a Pell Grant in college will be eligible for up to $20,000 in debt cancellation.
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Borrowers who met those income standards but did not receive a Pell Grant will be eligible for up to $10,000 in relief.
Federal Pell Grants are direct grants awarded through participating institutions to students with financial need who have not received their first bachelor’s degree or who are enrolled in certain postbaccalaureate programs that lead to teacher certification or licensure.
Nearly 8 million borrowers may be eligible to receive relief automatically because relevant income data is already available to the Department.
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“Earning a college degree or certificate should give every person in America a leg up in securing a bright future. But for too many people, student loan debt has hindered their ability to achieve their dreams—including buying a home, starting a business, or providing for their family. Getting an education should set us free; not strap us down! That’s why, since Day One, the Biden-Harris administration has worked to fix broken federal student aid programs and deliver unprecedented relief to borrowers, ” said U.S. Secretary of Education Miguel Cardona.
“Today, we’re delivering targeted relief that will help ensure borrowers are not placed in a worse position financially because of the pandemic, and restore trust in a system that should be creating opportunity, not a debt trap,” adds Cardona.