Through December 31, 2022, the suspension of student loan payments, interest, and collection has been officially extended by the U.S. Department of Education.
Borrowers must prepare to start making payments again in January 2023.
The President has made it clear that pandemic-related relief should be phased away responsibly so that people do not suffer unnecessarily from financial loss.
COVID cases are still at a high level despite the economy's continued improvement.
The Department will offer targeted student debt cancellation to borrowers with loans held by the Department of Education in order to mitigate the financial effects of the pandemic by easing the transition back to repayment and assisting borrowers who are most at risk of delinquencies or default once payments resume.
Borrowers who earned a Pell Grant while in college and had an annual income during the pandemic of under $125,000 (for individuals) or under $250,000 (for married couples or heads of households) are qualified for up to $20,000 in debt cancellation.
Borrowers who satisfied those income requirements but did not obtain a Pell Grant will be qualified for up to $10,000 in assistance.
Direct grants from the federal government, Pell Grants are given to students with financial need who have not yet earned their first bachelor's degree or who are enrolled in specific postbaccalaureate programmes that lead to teacher certification or licensure. They are distributed through participating institutions to these students.
Because the Department already has access to the necessary income information, nearly 8 million debtors may be qualified for automatic relief.
Cardona continues, "Today, we're giving targeted relief that will help ensure borrowers do not find themselves in a worse financial situation as a result of the pandemic, and restore trust in a system that should be fostering opportunity, not a debt trap.