Biden officials signal they may extend student loan payment freeze
White House chief of staff Ron Klain said last week that such an extension was being considered by the Biden administration as it grapples with a broader question of whether to cancel large swaths of it. student debt. The administration has not said publicly how long an extension he can consider.
Monthly payments and interest on most federal student loans have been suspended since President Donald Trump signed the CARES Act in March 2020. The Trump and Biden administrations have both extended relief through executive action on several occasions.
Most recently, in December, the White House backtracked at the last minute and announced it was again extending the payment break after pressure from a wide range of Democrats. By then, the ministry and its contractors had already sent out millions of notices to borrowers about resuming payments.
The department’s advice to loan managers this week reflects the logistical challenges the agency faces when it comes to reactivating the massive $1.6 trillion portfolio of student loans that was largely frozen in the over the past two years.
Loan servicers are required to send certain information to borrowers before their loans resume or begin for the first time – in addition to the host of awareness campaigns planned by the Education Department to remind borrowers of the expiration of pandemic relief.
Some of these notices to borrowers were to be published as early as this month. But they would be moot — and potentially confusing for borrowers — if the White House ultimately decides to extend payment relief again.
“The Department will continue to communicate directly with borrowers about federal student loan repayments by providing clear and timely updates,” an Education Department spokesperson told POLITICO on Tuesday. “The Department’s federal student aid office will also continue to communicate regularly with service officers regarding the type and cadence of service officer outreach to borrowers.”
Progressives have warned that it would be a massive political mistake for the Biden administration to send student loan bills to tens of millions of Americans just before the midterm elections this fall. They also argued that many borrowers are not ready to resume paying their student debt.
“Borrowers need immediate relief from the crushing burden of massive student debt as the pandemic exacerbates financial hardship for all Americans and puts existing racial disparities in wealth and education into relief. particularly striking,” a coalition of left-wing groups led by the Student Borrower Protection Center wrote in a letter to the White House this week.
In recent weeks, the White House has begun to view the suspension of student loan payments as a major accomplishment. “Joe Biden is currently the only president in history where no one has paid his student loans during his entire presidency,” Klain said last week.
Conservatives, meanwhile, are growing increasingly frustrated with the Biden administration’s continued expansion of the pandemic relief package. Top GOP members of Congress have urged the administration to resume student loan repayments, citing the rising cost to taxpayers of the suspension of interest and monthly payments.
The Department of Education estimates that pandemic relief is saving borrowers about $5 billion in interest each month and has increased the cost of the federal student loan program by more than $100 billion over the past few years. last two years.
On Tuesday, an American-led Conservative Major Groups Coalition for Tax Reform also called on the Biden administration to end the student loan repayment moratorium.
“This policy is fundamentally unfair,” the groups wrote in a letter to Education Secretary Miguel Cardona. “A student loan repayment moratorium is unfair to blue-collar Americans who haven’t racked up tens of thousands of dollars in debt and those who have proactively paid off their debt.”
The Biden administration has also faced pressure from private student loan refinance companies that have had to compete with the government’s 0% interest rate for the past two years.