The administration of President Joe Biden announced an extension of <a class=student loan payments through August 31. Delinquent and delinquent loan accounts will also be forgiven.” title=”The administration of President Joe Biden announced an extension of student loan payments through August 31. Delinquent and delinquent loan accounts will also be forgiven.” loading=”lazy”/>

The administration of President Joe Biden announced an extension of student loan payments through August 31. Delinquent and delinquent loan accounts will also be forgiven.

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Millions of people in the United States behind on student loan payments will have a fresh start, according to the White House.

On April 6, the administration of President Joe Biden announced a student loan pause extension payments through August 31, 2022. The extension will allow additional time for students to plan for resumption of paymentssays the US Department of Education.

The pause will also allow students to have a “fresh start” in repayment by “removing the impact of delinquency and default and allowing them to re-enter repayment in good standing,” the agency said in a press release.

This is what that means.

About 41 million people in the US have student loans and about 8 million are in arrearsPolitico reported.

The agency will automatically clear “defaults for all borrowers covered by the pandemic-related pause. That includes borrowers who owe federal student loans held directly by the Department of Education, as well as borrowers who defaulted on federally guaranteed student loans made by private lenders,” Politico reported.

“It’s important to pay the amount shown on your bill, and pay before the due date,” according to the Federal Office of Student Aid.

As early as the first day after a student loan payment is missed, the loan becomes past due. If a loan remains delinquent for 90 days or more, “your loan servicer will report the delinquency to the three major national credit bureaus,” the bureau says on its website.

If the loan continues to default, it will go into default.

When a loan is in default, the consequences can hurt a student’s financial future.

Here are some things that can happen when an account goes default:

  • All outstanding loan balance and interest due may be due immediately.

  • Borrowers could lose eligibility for other federal student aid.

  • Students’ credit scores will be damaged, hurting their ability to buy a car or home.

  • Employers could hold the payment to send to creditors.

In an April 6 statement, President Biden said he hoped the pause would allow “Americans to continue to recover after two of the most difficult years this nation has ever faced.”

He added that if payments had resumed as scheduled in May, “millions of student loan borrowers would face significant economic hardship, and delinquencies and defaults could threaten the financial stability of Americans.”

At an April 6 briefing, press secretary Jen Psaki said Biden had not “ruled out” large-scale change. cancellation of student debt.

Cassandre Coyer is a national real-time reporter for McClatchy covering the Southeast while based in Washington DC She is an alumnus of Emerson College in Boston, joining McClatchy in 2022. She previously wrote for The Christian Science Monitor, RVA Mag, The Untitled Magazine and more.