Biden administration formally extends student loan suspension
Nearly 40 million student borrowers can breathe a sigh of relief.
President Joe Biden announced Wednesday that his administration is extending the student loan moratorium through August 31, amid record inflation, rumors of a looming recession and a new wave of COVID-19 infections. 19.
The student loan moratorium freezes student loan repayments and fixes the interest rate on loans at 0%. Payments were due to restart on May 1, however polls found that borrowers were unwilling to resume payments and the research suggested that many would have been at risk of defaulting on their debts beyond just student loans.
“I know people have been hit hard by the pandemic,” Biden said in a video, announcing the extension. “And although we’ve come a long way in the past year, we’re still recovering from the economic crisis it caused.”
The news came after weeks of rumors that the White House would take steps to push back the previously announced May start date. Citing anonymous officials, Politico reported Tuesday that the extension was tentatively to last until the end of August. Biden and the US Department of Education later confirmed that timeline.
Former President Donald Trump first approved the federal student loan relief program in March 2020. The latest action marks the sixth extension – twice by Trump and now four times by Biden. Not only are loan payments frozen and interest waived, but the Department of Education has also stopped sending most missed loan payments to collections over the past two years.
The forbearance automatically applies to direct federal student loans, which account for more than $1.3 trillion of the total total student loan debt of $1.7 trillion. Private student borrowers are not eligible for this federal relief; however, some private lenders are offering pandemic-related relief packages that generally require borrowers to apply or pledge.
In addition to extending the student loan pause, the Department for Education also confirmed the “fresh start” initiative, which will allow borrowers who were delinquent or in default when the forbearance began to resume payments in good standing. at the end of the moratorium.
“This further extension will provide borrowers with greater financial security as the economy continues to improve and the country continues to recover from the COVID-19 pandemic,” the Education Secretary said. , Miguel Cardona, in a press release. declaration.
Will Biden cancel student debt?
The Biden administration’s announcement follows repeated calls from its left flank to, at the very least, extend the moratorium, if not cancel federal student debt outright. More than 90 Democratic lawmakers recently sent a letter to Biden urging him to extend the moratorium through the end of the year and forgive a “significant amount” of student loan debt. The letter was signed by Sen. Elizabeth Warren, D-Mass., as well as several progressive House members of “The Squad.”
In early March, the American Civil Liberties Union, the National Consumer Law Center, the Center for Responsible Lending and more than 200 other organizations drafted a letter themselves, noting that tens of millions of federal student loan borrowers were ill-equipped to restart payments during a time of tough economic recovery and record inflation.
The organizations called on Biden to “put an end to this crisis” by extending the moratorium and “fix the broken student loan system” by canceling a substantial amount of federal student loan debt.
Across the aisle, many Republicans said they thought the moratorium had lasted long enough. Last month, Reps. Jim Banks, R-Ind., and Bob Good, R-Va., presented a bill which aims to “prevent further abuse” by the Department of Education regarding other extensions. Since the legislation was dead when it hit the House, it was more a way for Republicans to formally oppose further student debt relief — which they say exacerbates inflation — than a way to curb it. significantly the authority of the Ministry of Education.
Still, many Democratic lawmakers, progressive activists and consumer advocates say extending the Aug. 31 moratorium doesn’t go far enough.
“Frankly, four months is not enough to fix a system that’s been broken for decades,” Abby Shafroth, acting director of NCLC’s student loans division, said in a statement.
On Monday, dozens of activists and advocates demonstrated outside the Department of Education in Washington, DC, pushing for Biden to “take up the pen” and cancel student debt by executive order. The group of protesters marched around the block, carrying signs, honking horns and a giant inflatable pen.
Throughout his campaign and early in his presidency, Biden has repeatedly expressed support for the cancellation of a minimum $10,000 of federal student debt per borrower.
So far, Biden has forgiven about $13 billion in federal student loan debt for more than half a million borrowers through targeted relief programs, and he’s extended the student loan moratorium to four occasions. In terms of blanket student loan cancellation, however, Biden’s rhetoric has softened and his administration appears reluctant to take executive action to cancel federal student debt for most borrowers, leading many progressives to consider it a broken campaign promise.
In a recent interview with Pod Save America, a left-leaning podcast, White House Chief of Staff Ron Klain suggested the administration is considering using executive action to write off student debt.
But the Biden administration has not released a specific amount or timeline for the pardon. The cancellation of student loans was not addressed in the announcement of the moratorium. Earlier, press secretary Jen Psaki said Biden would be happy to sign a bill canceling $10,000 in student loan debt if it reached his office, shifting the responsibility to Congress and away from the president.
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