July 22, 2022
The clock is ticking for the Biden administration to let borrowers know whether it plans to extend the pause on federal student loan payments, which is currently set to expire on Aug. 31. If the pause is not extended, 45 million borrowers will have to begin making payments on their federal student loans after a break of over two years.
The department has not yet communicated to borrowers or loan servicers whether it plans to extend the Aug. 31 deadline. However, if history repeats itself, recent actions by the department in communications with student loan servicers could hint at the possibility of an seventh extension to the pause that began in March 2020.
According to Scott Buchanan, executive director of the Student Loan Servicing Alliance, which works with loan servicers who oversee 95 percent of all federal student loans, in recent communications between servicers and the Education Department, which Buchanan said happened over the phone, some loan servicers have been told to hold off on sending billing statements to borrowers.
“We’ve been told to hold off communications to borrowers about that resumption,” said Buchanan. “That makes logical sense if you’re going to push it out, but if you decide not to do that, that means we lost months of communication to build up a successful return to repayment.”
Similar communications were made by the department to loan servicers in March; the previous payment pause was set to end in May. The length of time that loan servicers wait to send communications to borrowers about an upcoming payment varies. According to Buchanan, 45 days before the payment is due is standard for some servicers, a time frame that has already been passed for the Aug. 31 deadline, but some send out billing statements 30 days in advance.