Biden formally extends student loan payment suspension, promises ‘additional flexibilities’ for borrowers
The Biden administration announced on Wednesday that it would extend the pause on federal student loan repayments until August 31, 2022. Biden also promised additional flexibilities and support for borrowers, but refrained from committing to largely cancel student loans. Here is the latest.
Student loan payment suspension was due to expire on May 1
Most federal student loan payments have been suspended since March 2020 in response to the Covid-19 pandemic. The moratorium also froze interest on federal student loans held by the government and halted collection activities against borrowers in default on federal loans.
President Trump initially suspended federal student loan payments and interest using executive action. Congress then codified this relief by passing the CARES Act. Under this law, the suspension of repayment of student loans and the freezing of interest were to last six months. But President Trump, and then President Biden, extended it several times. Biden’s final extension was scheduled to end on May 1.
While the Covid-19 pandemic has waned since the astronomical number of cases during the Delta and Omicron waves, Americans are now grappling with historic levels of inflation and rapidly rising gasoline prices, in part related to the escalation of the conflict in Europe. Lawmakers and borrower advocates have urged Biden to extend the payment pause in response to these crises.
“The payment pause has been an important federal investment throughout the pandemic, providing essential relief to millions of families during the economic and public health crisis and saving them an average of $393 per month,” said wrote top Democratic lawmakers in a letter to Biden earlier this week. “Restarting repayment will financially destabilize many borrowers and their families, and cause hardship for many who cannot afford to repay.”
Biden further extends student loan payment break until August 31, 2022
The Biden administration announced on Wednesday that there will be an additional extension of student loan relief through August 31, 2022.
“We are still recovering from the pandemic and the unprecedented economic disruption it has caused,” President Biden said in a statement on Wednesday. “If loan repayments were to resume on schedule in May, analysis of recent Federal Reserve data suggests that millions of student borrowers would face significant economic hardship.”
Supporters hailed the move, although the short extension fell short of what many supporters had asked for. Leading Senate Democrats and advocacy organizations had called for an extension to 2023.
“We recognize the importance of extending the payment pause for borrowers struggling to cope with the damage caused by the pandemic, economic shocks and inflation. However, President Biden’s piecemeal and short-term approach n is not enough to face these difficult times,” said Natalia Abrams. , president and founder of the Student Debt Crisis Center in a statement.
Biden promises ‘additional flexibilities’ to borrowers but does not specifically mention student loan forgiveness
Biden promised there would be “additional flexibilities and support for all borrowers” when repayment resumes, and he said extending the payment pause until August would allow the Department of Education to ” continue to improve student loan programs”. He did not specifically mention student loan forgiveness.
Supporters have urged the Biden administration to use an extended pause in student loan payments to enact major, lasting reforms and institute broad student loan forgiveness. “Cancelling a significant amount of student debt will bring long-term benefits to individuals and the economy, helping families buy their first home, open a small business, or invest in their retirement,” they said. wrote top lawmakers to Biden last week.
In March, Sen. Patty Murray (D-WA) and other advocates urged the Biden administration to use the extended payment pause to transform the federal student loan system. She called on Biden to establish a new, more affordable, income-focused repayment plan, extend the temporary expansion of the Public Service Loan Forgiveness (PSLF) program, and adopt broader student loan forgiveness targeting borrowers. who need this relief the most. A bombshell report released by NPR this week revealed significant administrative issues plaguing the revenue-driven reimbursement plan system.
“When I talk to student borrowers…one thing is painfully clear: the student loan system is broken,” Senator Murray said in a statement in March accompanying the release of his proposal. “It ruins lives and holds people back. Borrowers are grappling with rising costs, struggling to get back on their feet after public health and economic crises, and grappling with a broken student loan system — and all of this is particularly felt by borrowers from color.
So far, the Biden administration has forgiven about $16 billion in federal student loan debt by easing rules and making it easier to access existing student loan forgiveness programs such as Civil Service Loan Forgiveness. (PSLF), Disability Releases and Borrower Reimbursement Defence. But that figure is only a fraction of one percent of total student debt outstanding, and advocates had urged Biden to go much further.
“The president has an opportunity to pass bold and meaningful relief instead of band-aid measures,” Abrams said. “We urge the President to consider the transformative effect permanent student debt cancellation would have for individuals, their families, and the economy.”
Further Reading on Student Loans
4 options for Biden to legally enact student loan forgiveness without Congress
Student loan relief: Advocates step up pressure on Biden to extend payment pause and cancel student debt
Student loan forgiveness: Top lawmakers urge Biden to forgive ‘significant’ amount of debt and extend payment suspension as polls show support
Who qualifies for the $6 billion student loan forgiveness announced by the Biden administration