There’s good news for student loan borrowers who are struggling to make student loan payments.
Here’s what you need to know.
Student Loans
The U.S. Department of Education said it will halt the collection of tax refunds, Social Security, child tax credits and other government payments to pay off student loans in default. As first reported by CNBC, the moratorium will now be extended from May until November. This is a major win for student loan borrowers, especially financially vulnerable borrowers who have been concerned about the end of temporary student loan relief on May 1, 2022. (Here’s where President Joe Biden stands on student loan cancellation).
According to the latest student loan debt statistics, there are less than 9 million borrowers in student loan default and student loan delinquency. Borrowers who are in student loan default haven’t paid their student loans in at least 270 days. In comparison, borrowers who are in student loan delinquency haven’t paid their student loans in at least 90 days. Since March 2020, when Congress passed historic student loan relief under the CARES Act, federal student loan borrowers have enjoyed the following:
- no mandatory federal student loan payments;
- 0% interest rates; and
- no collection of student loans in default
This announcement now means that student loan borrowers won’t be subjected to collection of student loans in default for another six months through the U.S. Treasury Offset Program.
