Here’s Why Biden May Really Extend The Student Loan Payment Pause

TOPSHOT – US President Joe Biden speaks about the collapse of the 12-story Champlain Towers South … [+] Housing construction last week in Surfside, Florida after meeting families of victims in Miami, Florida, July 1, 2021. – President Joe Biden flew to Florida on July 1 to “comfort” families of people who were in the rubble An apartment building on the beach in which hopes of finding survivors had all but vanished were killed or still missing. Biden and First Lady Jill Biden left the White House early to fly to Miami and then traveled by motorcade to nearby Surfside, where the death toll in the tragedy is now 18 and more than 140 are not yet known. (Photo by SAUL LOEB / AFP) (Photo by SAUL LOEB / AFP via Getty Images)

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With an 18-month suspension of federal student loan payments ending in just 90 days, there are mounting signs that President Biden may extend the moratorium beyond its current expiration date.

The CARES bill, the stimulus bill passed by Congress last year in response to the pandemic, temporarily suspended all payments on government-held federal student loans, frozen interest rates, and suspended all debt collection activities. The widespread suspension of student loan repayments was supposed to last six months, but has been extended several times since both former President Trump and President Biden took office. The current extension of the moratorium is set to end on September 30, 2021 – this means that millions of student loan borrowers will resume repayments in a few months.

So far, the Biden administration has not announced any further extensions. And there is a very good chance that student loan borrowers will actually have to start repaying again in October. A further extension of the payment break for the student loan is still possible. Here’s why.

Ongoing pressure to extend student loan payment suspension

Student loan activists and interest groups are sounding the alarm over the imminent expiration of the student loan payment moratorium. They have three main arguments:

• Millions of student loan borrowers will not be able to abruptly resume repayments this fall, given the ongoing pandemic and uneven economic recovery. A survey conducted by Student Debt Crisis and Savi found that 90% of student loan borrowers are unwilling to resume their payments in October.
• Student loan providers will be overwhelmed and unable to manage millions of borrower accounts simultaneously and resume repayment, an event that has no precedent.
• Major state student loan programs have historically been very poorly managed by loan service providers and the US Department of Education, causing widespread damage to borrowers. These programs should be repaired – and at least some student loan debt should be canceled – before borrowers are forced to resume repayment.

A coalition of these organizations submitted a letter to President Biden last week asking him to extend the moratorium.

Influential Democrats in Congress have also increased the pressure. Last week, Senator Elizabeth Warren (D-MA), along with several progressive allies, urged President Biden to extend the student loan moratorium to March 2022 or beyond. Other powerful Democrats recently joined, with Senator Patty Murray (D-WA) and Bobby Scott (D-VA), chairmen of the Senate and House Education Committees, sending their own letter to Biden.

It’s easy to extend the student loan payment moratorium

Last month, the Department of Education launched a series of public hearings that marked the first step in a major review and possible overhaul of key federal student loan programs such as income-based repayment plans, public sector lending, disability layoffs, and borrower defense repayment. Many of these programs have been plagued by administrative and bureaucratic problems for years. But the process of reforming government student loan programs through the regulatory process is extraordinarily slow and arduous, and requires constant input from stakeholders and the public. The final regulations are likely to be years away from implementation.

Extending the student loan payment moratorium, on the other hand, is easy – it can be done through a simple action by the executive branch, as President Biden did on his first day in office in January. And the benefits of the extension would be felt by millions of borrowers right away.

An extended hiatus on student loan repayments would save time for broader reform

The Biden administration recently completed key appointments within the US Department of Education, with Richard Cordray hired to manage the state student benefits system in May. Stakeholders have argued that the student loan payment moratorium should be extended to give the administration more time to implement key reforms such as:

• A 90-day review of the “Broken” Public Service Loan and Automatic Debt Relief Program for students who have ten or more years in the public service, regardless of whether they meet the program’s complicated eligibility criteria.
• Extending the facilities under the Borrower Defense and Repayment Program, which grants student loan waivers to borrowers who have been defrauded by their schools. The Biden government recently got rid of more restrictive rules enacted under former Education Secretary Betsy DeVos and has begun to provide more extensive relief to more borrowers. But tens of thousands of Borrower Defense applications are still pending.
• Automatic processing for borrowers who default on their federal student loan as the CARES Act provides that the months of suspended payments for loan rehabilitation are counted as if payments were made.
• Full Student Loan Termination – The Biden government has conducted a legal review to determine whether the President has the authority to unilaterally terminate major student loan terminations through executive action. The results of this review are ongoing but could be released soon.

Biden administration is open to a further extension of the student loan moratorium

The Biden administration has proposed several times to extend the student loan break further. At a public event in May, Education Minister Miguel Cardona said, “We’re looking at this. Of course, we will always be guided by what the data tells us and where we stand as a country in terms of pandemic recovery. [A further extension] out of the question. “Recently, Cardona said last week,” We are aware of the impact of the pandemic on our borrowers. And extending the hiatus is something we have been talking about. “

However, the administration has not definitively stated that another extension is coming. And officials have not indicated when a final decision can be made or announced. In the meantime, student loan borrowers should plan to resume repayment in October – but watch out for further developments.

further reading

Elizabeth Warren to Biden: Extension of Student Loan Break to 2022 or Later Or

Will Biden cancel the student loan debt? Maybe we will know soon

Biden government to cancel $ 500 million student loan – important details

Biden’s Student Loan Forgiveness Review: Should You Take Steps Now to Relieve Student Debt Later?

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