On August 6, 2021, the U.S. Department of Education announced that it would extend the moratorium on federal student loan payments until January 31, 2022. According to the Department's press release, this will be the final moratorium extension.

As we discussed back in 2020, the CARES Act provided temporary financial relief to federal student loan borrowers. That relief included (1) a pause on federal student loan payments, (2) the suspension of interest accrual during the moratorium, and (3) a freeze on involuntary student loan collections. These measures were initially set to expire on September 30, 2020, but subsequent extensions by Presidents Trump and Biden ultimately pushed back the expiration date to September 30, 2021. By the time the moratorium expires, federal student loan borrowers will have received CARES Act relief for roughly 22 months.

In its press release, the Department indicated that it will begin notifying federal student loan borrowers about this final extension in the coming days and that it will release information about how to plan for payment restart as the end of the pause approaches. It remains to be seen what, if any, support the Department will provide to federal student loan servicers to ensure that they do not run into issues while attempting to restart payment activity for millions of borrowers at the same time.

Many states established separate voluntary partnership programs with private student loan holders and loan servicers to provide financial relief to borrowers impacted by the pandemic. These voluntary programs generally provided private student loan borrowers with interest-accruing forbearance up to a certain number of months. They are not affected by the most recent extension of the federal student loan moratorium.

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