President Joe Biden plans to suspend federal student loan payments and interest through October 1.
Following President Trump’s March 31 declaration of a national emergency, Secretary DeVos immediately set all federal student loan interest rates to zero and suspended payment obligations until September. In August, Trump extended the suspension until December 31. Education Secretary Betsy DeVos pushed the suspension out another month to January 31.
Now the Biden administration says it will extend the suspension another eight months.
Federal student loans make up around 92 percent of all student debt and the suspension covers around 85 percent of the federal student debt. Excluded are some loans backed by the government but held by outside investors.
The suspension has been very popular. CNBC reported that “less than 11 percent of people with federal student loans are repaying them during the pandemic, according to data analyzed by higher education expert Mark Kantrowitz.” That works out to 4.6 million of 42 million borrowers continuing to pay down their debt.
Student loan borrowers make up twenty-three percent of the adult population of black majority neighborhoods and these areas are expected to see the highest share—14 percent—of their population benefit from student debt relief, according to a study by economists at the New York Fed. Thirteen percent of white-majority neighborhoods, where borrowers make up 17 percent of the population. will benefit. On a per borrower basis, however, borrowers in white-majority areas will receive the most relief because they have the highest average monthly payments. Hispanic majority neighborhoods, where borrowers make up just 14 percent of the population, are expected to see just 12 percent benefit.