President Joe Biden has extended the repayment pause for federal student loan borrowers through Aug. 31, giving regent institution graduates more time to manage their money.

The repayment pause has been in effect since March 2020 but was scheduled to expire on May 1. In an April 6 statement, Biden said the extension will help student loan borrowers avoid economic hardship, delinquencies, and defaults.

“That additional time will assist borrowers in achieving greater financial security and support the Department of Education’s efforts to continue improving student loan programs,” the statement reads. “As part of this transition, the Department of Education will offer additional flexibilities and support for all borrowers.”

At the University of Iowa, the student loan freeze affects mostly former students who have already graduated. Cindy Seyfer, UI assistant provost and director of student financial aid, said the extended freeze will help them manage the interest that goes along with the loans.

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“Their interest isn’t accumulating, and, for many students, that can be almost the bigger issue than their loan principal because the interest just keeps growing as they’re making their payments,” Seyfer said. “Ultimately, the total amount of their payments is considerably more than what they borrowed, so that’s a real benefit.”

She said the freeze is also helping students get out of default, which is when a student fails to repay a loan according to the terms agreed to in the promissory note.

“If a student wanted to purchase a car and have another kind of loan…they wouldn’t be able to get loans if they were in default,” Seyfer said. “But if they now are, their status is going to be able to be brought out of default. That opens things up for that individual.”

The UI hasn’t seen a shift in the number of students taking out loans, but it has seen a reduction in loan indebtedness, Seyfer said. Now is the best time to take a loan out, she said, because it is at the minimum amount due to the freeze.

Seyfer recommends that those who are replaying loans continue to prepare for when the freeze eventually ends.

“I would encourage people to be taking that money that they would have normally had to be making payments on and putting it in a bank account, setting it aside so that as soon as the freeze does end, they’ve got that money there that they can keep or start paying with that,” Seyfer said.

At Iowa State University, fewer students are needing to request deferment because payments are not required. Roberta Johnson, ISU director of financial aid, said the number of students in need of deferment may not be accurate when the pause unfreezes.

“The list that we’re getting from the various services that are showing students statuses, right now obviously the number of students that are showing as delinquent or in default has dropped dramatically, which is nice. It’s a great thing, but it’s just not an accurate statistic,” Johnson said.

ISU has not seen the number of students requesting loans increase, Johnson said.

“Students are coming in as they have for decades since the student loan program was implemented, and they are seeking student loans to help them to pay their cost of going to college,” Johnson said. “That is really no different than it’s ever been.”

The university doesn’t hear feedback from the students who have graduated about the freeze, Johnson said, but she thinks the freeze helps students’ lives overall.

“We don’t hear from a lot of our loans that come back and say, ‘Oh, I’m so thankful that I don’t have to be making loan payments,’” Johnson said. “I’m sure it’s simplified their life a little bit.”

While the UI and ISU are not hearing from former students, the University of Northern Iowa has created a new position for a graduate assistant that helps with the communications regarding the freeze and repayment and is focused on default prevention.

“With that, we are collecting information on our students that have graduated since the COVID forbearance went into effect,” UNI Financial Aid Counselor Kaili Benham said.

Benham said since the forbearance went into effect, UNI has been collecting information on borrowers who struggled before the freeze went into effect. That way, they can touch base with them to assure that they understand what options they have to be successful with repayment moving forward.

The calling system has been used multiple times when borrowers have received UNI reminder repayment emails, Benham said, but the school would like to see more people reach out.

“We actually have started to promote the fact that we have this grad assistant available to really help people understand what that process is going to look like,” Benham said. “We promoted it through our Alumni Association newsletter as a way to try and connect with those students that are gone that may have questions.”

UNI has also seen a drop in people going into default, but Benham is worried about numbers changing when the freeze ends.

“I think if you were to look at the data, you would see that most of our cohort default rates went down this year, and we all suspect that it will be either even further down next year,” Benham said. “The concern is that it will start to rise once repayment does start to happen.”