Federal moratorium on student loans extended until January 31, 2022 – Finance and Banking

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United States: Federal moratorium on student loans extended until January 31, 2022

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On August 6, 2021, the US Department of Education announced that it will extend the moratorium on federal student loan payments until January 31, 2022. According to the department’s press release, this will be the last extension. of the moratorium.

As we discussed in 2020, the CARES Act provided temporary financial relief to federal student loan borrowers. This relief included (1) a pause on federal student loan payments, (2) the suspension of accrued interest during the moratorium, and (3) a freeze on involuntary student loan collections. These measures were originally scheduled to expire on September 30, 2020, but subsequent extensions by Presidents Trump and Biden ultimately extended the expiry date to September 30, 2021. When the moratorium expires, federal student loan borrowers will have benefited from a relief from the CARES law. for about 22 months.

In its press release, the Department said it will begin advising federal student loan borrowers of this latest extension in the coming days and will release information on how to plan for the resumption of payments as they approach. of the end of the break. It remains to be seen what support, if any, the Department will provide to federal student loan services to ensure they don’t run into problems while trying to restart payments business for millions of borrowers at the same time. time.

Many states have set up separate voluntary partnership programs with private student loan holders and loan officers to provide financial relief to borrowers affected by the pandemic. These voluntary programs generally provided private student loan borrowers with interest-free payments for up to a certain number of months. They are not affected by the most recent extension of the federal moratorium on student loans.

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This article by Mayer Brown provides information and commentary on legal issues and developments of interest. The foregoing does not constitute a complete treatment of the matter at hand and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action on the matters discussed in this document.

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