The White House has been quiet on the topic of student loans lately, but that may change today, as President Biden is slated to introduce his budget for the 2023 fiscal year later today.
Over the last couple of months, millions have been left wondering whether loans will be paused again, especially in the midst of current inflation, or whether Biden still plans on canceling a portion of student debt. Student debt repayments have been on pause since March 2020 and are currently set to resume May 1, 2022, but signs point to another extension of the student loan moratorium.
Earlier this month on March 3, White House Chief of Staff Ron Klain said that Biden was going to decide whether to cancel student debt before the pause expired, or, alternatively, that he’d extend the pause. Then, about a week later, Department of Education officials started instructing companies managing federal student loans to pause sending notices about payments starting up again, as first reported by Politico.
While on the campaign trail, Biden said he’d support legislation canceling a minimum of $10,000 of federal loans per borrower. However, the White House has been largely silent on the issue since Biden took office, though the Department of Education made moves on this front in the last couple of months.
Following the Department’s revamp of its Public Service Loan Forgiveness program in October 2021, 70,000 borrowers had their student loans extinguished, collectively reaching nearly $5 billion as of January. Subsequently, in March, the Department announced that approximately 30,000 more have been deemed eligible for relief under the Public Service Loan Forgiveness waiver.
Whether Biden has the legal authority to unilaterally cancel student debt through executive action, without legislation from Congress, is still unclear. The Department of Education released a memo (PDF) on this issue last year, but the highly redacted document offers little information for public eyes.
Federal student debt repayments have been paused for nearly two years now. Since the pause was first enacted, interest hasn’t accumulated and collections on defaulted debt have been put on hold.
Former President Donald Trump first enacted the pause on student loans in March 2020 and extended it until January 2021. Biden extended the pause two more times after taking office, with his administration warning that the January extension would be the last.
However, with the omicron variant of COVID-19 sweeping through the US last year, Biden’s administration decided to further extend the student loan repayment moratorium until May 2022.
Millions of student loan borrowers “need some more time before resuming payments,” according to Biden’s statement last year.
Biden also called on student loan borrowers to “do their part” and “take full advantage of the Department of Education’s resources to help you prepare for payments to resume; look at options to lower your payments through income-based repayment plans; explore public service loan forgiveness; and make sure you are vaccinated and boosted when eligible.”
We’ll keep you updated as this story unfolds and Biden announces the new budget.
