EXPLAINER: Biden extends student loan freeze through August

The Biden administration has announced that federal student loan payments will remain paused through Aug. 31, extending a freeze that began in 2020 but was set to end after this month

The Biden administration on Wednesday announced that federal student loan payments will remain paused through Aug. 31, extending a freeze that began in 2020 but was set to end after this month. The action is meant to help millions of borrowers regain financial footing before they’re back on the hook for payments.

Here’s more on the decision:

WHAT DOES IT MEAN FOR BORROWERS?

The extension gives Americans another four months to get ready for student loan payments to restart. Borrowers won't be asked to make payments until after Aug. 31, and interest rates will remain at 0% during that time. Under the new action, people who were behind on payments before the pandemic will automatically be put in good standing with the Education Department. That’s a change from previous policy, which required borrowers in default to make nine consecutive loan payments and apply to exit default. Education Secretary Miguel Cardona said the extra time will help his agency prepare borrowers for a “smooth transition back to repayment."