Student-Loan Payments Are Now Paused Through August. But Then What?
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What is the main topic discussed in this episode?
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What did the Biden administration announce about pausing federal student-loan payments through August?
Here's your money briefing for Thursday, April 7th. I'm JR Whelan for The Wall Street Journal. People with student loans just caught another break. The pause on student loan repayment that was scheduled to expire in just a few weeks has been extended once again to August 31st. And there's more.
The education department is going to spend the next several months working on delivering a fresh start to lots of borrowers, including people who are currently in default, allowing them to reenter into payment and have their credit scores improved.
So what should borrowers look out for between now and August? And what are the chances of another extension after that? We'll ask WSJ reporter Gabriel Rubin those questions and more after the break.
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Millions of student loan borrowers have gotten another reprieve now that the Biden administration has extended the pause on loan repayments to August 31st. So what should borrowers do until then? What happens after that? And is loan forgiveness still on the table?
Why did officials cite the Fed study as a reason to delay restarting payments?
WSJ reporter Gabriel Rubin has been following this topic for us every step of the way, and he joins me now to discuss. Hi, Gabe. Thanks for being here.
Pleasure to be here.
So Gabe, on previous occasions when the pause in repayments was extended, the White House has said there would be no more extensions. So why was the pause extended again?
President Biden said in his statement announcing the pause that he had reviewed a Federal Reserve Bank of New York study that showed that if borrowers were to reenter into repayment right now, we would see delinquencies skyrocket and lots of people would not be able to pay their loans, either their student loans or also their other debts that are outstanding, you know, whether that's their mortgage loan or other things in their finances, because they would just be put over the top by having to repay their student loans.
All right, so people are still hurting financially. Is anything being done to ease the financial hit on borrowers when the repayments do resume?
There's been a lot of pressure on the administration to change the entire system of student debt, which most people would agree is pretty broken right now. And the education department is presumably gonna spend the next several months working on delivering a fresh start to lots of borrowers, including people who are currently in default, allowing them to reenter into payment and have their credit scores improved, as well as improving the system for income-driven repayment, which would allow people to pay something that they could actually afford as opposed to just staring at a level of debt that just keeps increasing that they can't seem to get rid of. The Biden administration certainly wants to keep in place some sort of system that allows people to be able to finance their college educations.
But most people would agree that the current system where an 18-year-old can take out five or six figures worth of loans is not working.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–0:30
2
What did the Biden administration announce about pausing federal student-loan payments through August?
0:30–2:04
3
Why did officials cite the Fed study as a reason to delay restarting payments?
2:04–4:22
4
What short-term relief and system changes is the Education Department planning before August 31?
4:22–8:33
Speakers
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