The Biden administration will extend the pause on federal student loan repayments through May 2022 — just weeks before the moratorium was set to expire — amid pressure from progressive Democrats.
The Department of Education paused federal student loan payments in March 2020 at the onset of the coronavirus pandemic and set the interest rates to 0% during the pause. Federal borrowers were scheduled to resume payments on Feb. 1, 2022.
Biden, on his first day in office, directed the Department of Education to pause federal student loan repayments through September 2021. In August, the Biden administration extended the pause through the end of next month.
"Today, my Administration is extending the pause on federal student loan repayments for an additional 90 days — through May 1, 2022 — as we manage the ongoing pandemic and further strengthen our economic recovery," Biden said in a statement, noting that the Department of Education will "continue working with borrowers to ensure they have the support they need to transition smoothly back into repayment and advance economic stability for their own households and for our nation."
The pause in federal student loan repayments gave "41 million Americans badly-needed breathing room during the economic upheaval caused by the global COVID-19 pandemic."
Biden, though, acknowledged that "millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments."
"This is an issue Vice President Harris has been closely focused on, and one we both care deeply about," Biden said, urging student loan borrowers to "take full advantage of the Department of Education’s resources to help you prepare for payments to resume; look at options to lower your payments through income-based repayment plans; explore public service loan forgiveness; and make sure you are vaccinated and boosted when eligible."
Last week, the Biden administration signaled that they still planned to resume federal student loan payments at the end of January, rejecting a push from progressive Democrats to extend the pandemic relief program.
Asked last week whether Biden intended to extend a payment freeze that's poised to expire in February, White House press secretary Jen Psaki said the administration has no plans to do so and is instead focused on ensuring a "smooth transition back into repayment."
"We will engage directly with federal student loan borrowers to ensure they have the resources they need and are in the appropriate repayment plan," Psaki told reporters last week. "We're still assessing the impact of the omicron variant."
Last week, in letter addressed to the White House, Senate Majority Leader Chuck Schumer, D-N.Y., Sen. Elizabeth Warren, D-Mass., and Rep. Ayanna Pressley, D-Mass., warned that millions of families could be hurt financially and that the economy's recovery from the pandemic imperiled if Biden does not extend the federal government's pause on student loan payments.
Schumer, Warren and Pressley also called on Biden to cancel $50,000 in outstanding federal debt per borrower via executive order. The Democrats have maintained that Biden could use existing executive authority under the Higher Education Act to order the Department of Education to "modify, compromise, waive or release" student loans.
Biden campaigned on canceling billions of dollars in student loan debt but has so far erased just a fraction of the pledged amount for about 72,000 borrowers, drawing ire from some progressive lawmakers who want him to move further left on the issue.
Outstanding student loan debt has doubled over the past decade, nearing a staggering $1.7 trillion. About one in six American adults owes money on federal student loan debt, which is the largest amount of non-mortgage debt in the U.S. It has been cited as a major hindrance in people’s "economic life" by Federal Reserve Chairman Jerome Powell.
The Education Department has provided about $72 billion in relief on student loan interest alone.
Biden's announcement comes amid a surge in cases of the omicron variant of COVID-19.
The Centers for Disease Control and Prevention (CDC) announced this week that omicron variant is now the dominant strain of the coronavirus in the United States, making up 73.2% of new infections in the week that ended Dec.18 — up from just 12.6% the prior week.
Across the country, schools are beginning to shift to remote learning, restaurants are closing their doors to the public, and events are once again being canceled as a result of the new omicron variant of the coronavirus. Broadway shows in New York City have been canceled, along with the Rockettes' "Christmas Spectacular" shows. The National Hockey League also announced a pause to its season.
FOX Business’ Megan Henney contributed to this report.