The move continues the suspension of payments for all loans owned by the Education Department, maintaining a 0% interest rate and keeping in place a freeze on the collection of defaulted debt. Payments will begin coming due again on Feb. 1.

All of the loan measures, first adopted in March 2020, were to expire at the end of September. The administration intends for this to be the final extension of the protections and announced the move Friday to give certainty to borrowers and loan servicers, a person familiar with the matter said on the condition of anonymity to preview the plan.

The announcement gives servicing companies that process payments for the Education Department more time to prepare for the influx from borrowers. In all, 41 million borrowers benefited from the measures, including several million current students.

“The payment pause has been a lifeline that allowed millions of Americans to focus on their families, health, and finances instead of student loans during the national emergency,” Education Secretary Miguel Cardona said in a statement. “As our nation’s economy continues to recover from a deep hole, this final extension will give students and borrowers the time they need to plan for restart and ensure a smooth pathway back to repayment.”

Pressure from Schumer and Warren

President Joe Biden and Cardona faced pressure from congressional Democrats, including Senate Majority Leader Chuck Schumer, who said last month that restoring payments could “bring millions of borrowers to the edge of financial crisis.” Schumer and Massachusetts Senator Elizabeth Warren have been among the most vocal in urging the administration to extend the protections.

The temporary extension deflects some tension from Schumer and Warren’s push to persuade Biden to cancel up to $50,000 of student debt per borrower. The two senators see the pandemic protections as an interim step toward their goal, even though Biden has said he doubts he has the authority to cancel so much student debt.

The president has said he believes he could cancel as much as $10,000 in debt per borrower. The departments of Education and Justice have been engaged in a months-long review of the issue.

“While this temporary relief is welcome, it doesn’t go far enough,” Schumer, Warren and Massachusetts Representative Ayanna Pressley said in a statement. “We continue to call on the administration to use its existing executive authority to cancel $50,000 of student debt. Student debt cancellation is one of the most significant actions that President Biden can take right now to build a more just economy and address racial inequity.”

Representative Jamaal Bowman, a New York Democrat, said on Twitter: “Sounds like January 31, 2022 is the deadline to cancel student debt. No more extensions required.”

A poll conducted in May and June for the Pew Charitable Trusts found that 67% of student loan borrowers said it would be difficult for them to afford payments if they were to resume the following month. Though the Sept. 30 end of forbearance had already been announced, 52% of those affected by the pause said they did not know when they would be required to resume payments, suggesting that they will need help from the Education Department and loan servicers in transitioning back to repayment.

Stimulus erasures

Some colleges have also tried to ease the burden of their students by using stimulus money to erase unpaid balances owed to colleges, which is separate from federal loan relief.

The concern over borrowers who cannot pay stems from the repercussions of default: scarred credit ratings, which can lead to difficulty renting an apartment or securing a mortgage or even credit check for a job. Loan servicers also need time to staff up again, a person familiar with the plan said.

In a June letter, Warren, Minnesota Senator Tina Smith and Massachusetts Senator Ed Markey warned the chief executives of all the federal student loan servicers about restoring payments without supporting borrowers.

“If struggling borrowers are dropped back into repayment on their student loans with no adjustments or support, then they could find themselves in default or distress, facing disastrous long-term economic consequences that will echo across generations,” the lawmakers said.