Interest Pause Saves Borrowers Billions Every Month

Number of the Day: The most relevant or interesting figure in personal finance

NOTD - $5 Billion

That’s the amount federal student loan borrowers save every month, thanks to a pause on interest on their loans, according to a government memo released this week.

The memo from the Department of Education, requested by Sen. Elizabeth Warren (D-Mass.) for a Senate subcommittee hearing Tuesday about student debt, shows the scope of relief provided since March 2020 to those with federal student debt. Borrowers also have been allowed to stop loan payments completely, with collections on defaulted loans also on hiatus. The relief measures are set to expire at the end of September, at least for now.

With nearly $1.6 trillion in federal student debt, progressive Democrats like Warren hope to provide more long-lasting relief by canceling thousands of dollars of debt for every borrower. President Joe Biden wants to cancel some student debt, too, but he remains apart from legislators in the liberal wing of his party on how to achieve it and exactly how much forgiveness to provide—although the American Rescue Plan might help change that.