Federal Student Loan Reprieve Extended Through January
Those with federal student loans have been given an extra month of reprieve. Monthly payments, interest, and collections on federal student loans have been suspended through Jan. 31, the U.S. Department of Education said Friday.
Loans will not accrue interest during this time and borrowers will continue to benefit from a 0% interest rate through the end of January, the Department of Education said. That means any payments made during this forbearance period will go entirely toward the loan principal, making repayment a potentially attractive option for borrowers in a position to do so. The forbearance also benefits those with income-driven repayment plans, a loan rehabilitation agreement, or who participate in a public service loan forgiveness program because the non-paying months will count toward the number of payments they are required to make.
The forbearance extension represents a respite for households suffering financially during the pandemic, and who are facing the expiration of several government relief programs at the end of December, including unemployment benefits and protection from evictions. The forbearance applies to federal student loans, which account for about 92% of all student loan debt in the country.
"The coronavirus pandemic has presented challenges for many students and borrowers, and this temporary pause in payments will help those who have been impacted," Secretary of Education Betsy DeVos said in a statement.
The federal student loan forbearance program, created in March, was initially set to expire in September. It was extended through the end of the year in August due to persistent unemployment as the pandemic crisis wore on.