IOWA CITY, Iowa — Wednesday, the Biden administration announced the extension of the student loan repayment freeze through May 1, giving borrowers a little more time to recuperate amidst another wave of COVID-19 activity.
It was Democrats in Congress who pressured Biden to extend the pause on repayments due to new challenges associated with the pandemic. Borrowers were originally expected to start payments on Feb. 1, but with the latest extension, they won't have to fork up the money until May 1.
CEO of Iowa Student Loans Steve McCullough said he was shocked by this announcement.
"Nobody really expected it because the Biden administration had been very adamant that people were going to start making payments again on February 1," McCollough said. "And their press release today said, you know, there's new factors, including the omicron variant that's led them to believe that they should extend for another 90 days. But that wasn't expected to happen. It was kind of a surprise for everyone, including us."
Many Americans haven't been expected to make a payment towards their loans since March of 2020. Borrower Austin Siefers said he is grateful for the break as his road to repayment could last more than a decade.
"I would say once they resume and they're paying similarly to what they were a few 100 a month, it would be at least 10 years potentially longer before I'd pay them off," Siefers said. "Probably looking more towards like 15, depending on the repayment plan that I choose."
According to Iowa State Loans, close to half a million Iowans have student loans with payments of as much as $500 a month. When it comes to choosing your repayment plan, or simply starting your payments back up again, McCullough says reaching out to your loan supervisor is your best first step.
"If you're supposed to start making your payment, come May 1 and you know that you're going to struggle to do that. well in advance of that, call your servicer, tell them that and ask them what type of assistance they can give you," McCollough advised. "They could put you on a different payment plan that requires a lower payment amount. They have different types of deferment or forbearance is for special circumstances. So there's things they can do to help you but they can only help you if you talk to them."
There are a number of repayment plans for federal student loans, but they may vary depending on your servicer. Here is a couple as listed by Federal Student Aid:
- Pay as you earn: Your monthly payments under this plan would be about equal to 10% of your income.
- Income-based payment: This is similar to paying as you earn but payments are equal to 15% of your income.
WATCH | Biden extends pause on federal student loan payments to May 1