The Biden administration is expected to extend the freeze on federal student loan payments. The student loan moratorium was set to expire on May 1, but according to Bloomberg, the White House plans to extend it through Aug. 31.
The report follows calls from top Democrats who have been urging President Joe Biden to extend the student loan repayment pause and provide “meaningful” debt cancellation. They include Senate Majority Leader Chuck Schumer, Sen. Elizabeth Warren and Rep. Pramila Jayapal, chair of the Congressional Progressive Caucus. The letter surfaced after Biden announced his budget proposal for fiscal 2023, which did not mention student loan cancellation or an extension to the federal student loan repayment pause.
“White House Chief of Staff Ron Klain’s recent comments about potentially extending the payment pause and administratively canceling student loan debt are encouraging to millions of borrowers across the country,” the letter reads. “Although there may be different ideas about the best way to structure cancellation, we all agree that you should cancel student debt now.”
The letter makes reference to Klain’s comments during a podcast on March 3, in which he said that Biden was going to decide whether to cancel student debt before the pause expired, or extend the deferment. The following week, 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.
“Restarting repayment will financially destabilize many borrowers and their families, and will cause hardship for many who could not afford repayment,” the letter states. On average, it notes that student loan holders have saved $393 per month.
We’ll keep you updated with this news as it drops later this week.
What you should know about the federal student loan payment pause
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, 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 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 twice more 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 in December.
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.”
