The Biden administration’s extended child tax credit amounted to direct payments to Americans raising children

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. Stephanie Sy reports.

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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.

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.

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?

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.

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.

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.

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

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.

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?

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.