In November, the U.S. Department of Education announced another extension of the pause on student loan repayment, interest, and collections (“Payment Pause”) until August 2023 at the latest.

Student loans have been in Payment Pause since March 2020. We calculate the conventional budgetary costs and distributional effects of the current-law Payment Pause between March 2020 and August 2023.

• Current Law: All federal student loan borrowers are eligible. Total budgetary costs are estimated to be $210.0 billion with 23% of the benefit accruing to households in the bottom 50 percent of the income distribution.

We also present three alternative policies that would have instead limited the Payment Pause to lower-income households based on different means-tested rules. If implemented in March 2020 and continued until August 2023, we calculate the following results:

• Alternative 1: Only Pell Grant recipients are eligible. Total budgetary costs are estimated to be $129.0 billion with 49% of the benefit accruing to households in the bottom 50 percent of the income distribution.

• Alternative 2: Only households with income below 2.25 times the Federal Poverty Line are eligible.

  Total budgetary costs are estimated to be $60.1 billion with 89% of the benefit accruing to households in the bottom 50 percent of the income distribution.

• Alternative 3: Only households with income below 1.5 times the Federal Poverty Line are eligible.

  Total budgetary costs are estimated to be $30.2 billion with 100% of the benefit accruing to households in the bottom 50 percent of the income distribution.