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US President Joe Biden speaks in the Roosevelt Room of the White House in Washington, DC, US, on Sunday, Aug. 22, 2021. Image Credit: Bloomberg

Washington: US President Joe Biden extended the pause on student loan repayments through May 2022 as the United States faces a fresh wave of Covid-19 cases from the omicron variant.

Biden initially extended the moratorium through September after he took office and then extended it again until Jan. 31. The president has faced pressure from Democratic lawmakers to give the extension.

Under the action, payments on federal student loans will remain paused through May 1. Interest rates will remain at 0 per cent during that period, and debt collection efforts will be suspended. 

President Joe Biden said financial recovery from the pandemic will take longer than job recovery, especially for those with student loans.

``We know that millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments,'' he said in a statement.

The omicron variant of COVID-19 that has swept through the US with a fury has lent a new urgency to the question over whether the moratorium would be extended. Administration officials had initially said they expected the January extension to be the last. But even as the economy improves, there are concerns that borrowers are not ready to start payments again. Once the moratorium ends, those who were already behind on payments could have wages and benefits taken away as part of debt collection efforts.

The policy applies to more than 36 million Americans who have student loans that are held by the federal government. Their collective debt totals more than $1.37 trillion, according to the latest Education Department data. About a third of borrowers are in default or delinquency and the average monthly payment is $400 a month.