What you need to know about the extended student loan payment pause, child tax credit

American graduates and their families may be feeling relief Wednesday after the Biden administration extended a pause on student loan payments. Payments will not be required before May 1, and the extension will help around 41 million borrowers. Meanwhile, millions of families who relied on an increase in the child tax credit are about to lose getting that extra money. Stephanie Sy reports.

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  • Judy Woodruff:

    There was some important news today for college graduates and their families, with the Biden administration extending a pause on student loan payments. Payments will not be required before May 1, and the extension will help around 41 million borrowers.

    Meanwhile, millions of families who relied on an increase in the child tax credit are about to lose getting that extra money.

    Stephanie Sy has more about what's at stake.

  • Stephanie Sy:

    Good evening, Judy.

    The Biden administration's extended child tax credit amounted to direct payments to Americans raising children. They were more generous and included more poor families. Estimates show nearly 10 million children are at risk of slipping deeper into poverty as the credit expires.

    It won't disappear entirely, but instead of getting monthly payments of up to $300 per child, Americans will have to file a tax return to claim the funds. The government will also reduce the amount from $3,600 to $2,000 per child annually.

    Joining me now is Michelle Singletary, personal finance columnist for The Washington Post.

    Michelle, welcome to the program. It's great to see you.

    I want to first go into the student loan repayment pause that President Biden announced today. It was supposed to end on January 31. Why this reversal today and how does it change things?

  • Michelle Singletary, The Washington Post:

    Well, there was lots of pressure on the president to extend it because people are still suffering.

    So, there was a lot of outcry from consumer advocates, obviously borrowers, and people in Congress who are saying, listen, people still need this break, even though the administration said the last pause was the absolute last one.

    But, as everyone knows, the pandemic and things are just constantly changing. And so that's why they decided, hey, let's give people at least three more months with no payments.

  • Stephanie Sy:

    OK, do you see at this point, Michelle, blanket forgiveness of federal college loans in the offing? Because the president has also been under pressure by progressive Democrats to do that.

  • Michelle Singletary:

    You know, I don't.

    I think that that is a long shot. There is so much on this list that the president needs to get through that giving people — forgiving their loans right now is probably not in the top three. So I know there are lots of people who are just holding on to it, I have talked to them, who says, you know, I'm not going to pay any more than I have to because I'm going to get this loan forgiveness.

    Listen, you need to pay those loans if you can. And while there is a pause, if you haven't had a disruption in your income, I would say pay on that debt, because it's not — there is no interest, so you are going to put that money directly on the principal. So, if you can afford it, just go ahead and make those payments, even now.

  • Stephanie Sy:

    So do not hold out for student loan forgiveness.

    All right, let's move to the child tax credit. The last direct payments were sent on December 15, Michelle. What does that mean in coming months for families caring for children?

  • Michelle Singletary:

    So, they got half of that, the advance payments, from July until December. They are going it to stop now, obviously. They stop. And then they can file tax returns next year to get the rest of that money.

    But what happened, what we found was that people really used that money for what they need it for, rent, food for their kids. They managed the money on a monthly basis. When you give people some money in a lump sum during the times that they don't have these payments, they accumulate debt, they don't pay their rent, they fall behind on things.

    And so it was so key to keep this going. And, unfortunately, millions of people are going to suffer. And they were working. They were trying. And, listen, they did extend it to people with no income or low income. But these aren't people who were trying to just suck the government dry. They really are trying.

    And it's so important to keep this going. But, unfortunately, at this point, it doesn't look like it's going to happen. But those families can still collect those payments when they file their return.

    And if anybody who didn't get those payments, they still can get them by filing a return in 2022.

  • Stephanie Sy:

    But, Michelle, as you know, there are millions of American families that don't make enough money to file those tax returns. What are they facing without these monthly checks?

    I mean, are we going to go back to the beginning of the pandemic, when we were seeing long lines with children and families at food banks, do you think?

  • Michelle Singletary:

    Well, they're still eligible for these payments.

    So, you get — if they — let's say they didn't get them for July, they didn't know they were going to file. So, a lot of community groups are trying to let people know that, if you had low income or no income, you are still eligible to get those payments. You are just going to have to file a return.

    Now, if there's not those monthly payments kicking in, you're absolutely right. More people are — unfortunately, there are going to be kids who are going to go to bed with no food. There are families who are going to worry about the roof over their heads. That's real.

    And the pandemic showed that we have a country of haves and have-nots, and the have-nots were already on the edge. And the pandemic just pushed them over. And now they're still trying to climb up, while we are still going through a surge in COVID.

    And, unfortunately, they are going to suffer.

  • Stephanie Sy:

    I feel your passion for this, especially as we head into the holiday season here. And those families always face so many more expenses during the holidays.

    The Build Back Better plan, as you know, Michelle, is stalled largely because Democratic Senator Joe Manchin opposes keeping the child tax credits, the extended credits, in their current form. How do you think that plays out? Do you think some form of this guaranteed income for families will remain intact in the end?

  • Michelle Singletary:

    I don't.

    I wish — I mean, it's the holiday, and you want to be happy and upbeat, and you want things to happen. The senator, one of the key reasons why he doesn't want it is because he wants a work requirement. With the expanded money, it extended to people with no income or low income, where, before, you had to have a threshold of income.

    But, look, if you can't work at a restaurant because it's closed down, or your factory closed down, or someone in your household is sick from COVID, even if they have gotten the vaccination, what do you do? And so while we are wagging our fingers and why aren't you doing better, this was a way to make sure that people at least have the bare minimum.

    And, oftentimes, those people who are taking care of those children are grandparents. I should know.

  • Stephanie Sy:


  • Michelle Singletary:

    I was raised by my grandmother.

    And so they — they're on a fixed income taking care of these kids. And it's very important that we continue what happened with these advanced payments. Families used the money for what it needed to be used for.

  • Stephanie Sy:

    Michelle Singletary, personal finance columnist at The Washington Post, thank you for sharing your perspective on the "NewsHour."

  • Michelle Singletary:

    Thank you.

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