President Biden may enact a last-minute extension of the ongoing federal student loan payment pause. Here’s the latest.
‘Final’ Extension Of Student Loan Payment Pause Ends Next Month
Federal student loan payments have been suspended since March 2020, following passage of the CARES Act. That legislation also froze federal student loan interest, and stopped all collections efforts on defaulted federal loans. The CARES Act originally contemplated a six-month pause in student loan payments, but former President Trump and President Biden extended that relief multiple times as the Covid-19 pandemic and associated economic fallout persisted over two years. Biden’s most recent extension is set to end on January 31, 2022.
Administration officials repeatedly stated that this would be the “final” extension of student loan relief, and rejected calls to extend the relief yet again by student loan borrower advocacy groups and Democrats in Congress. But those calls have only grown louder in recent weeks as record inflation has taken hold, and the country is facing a fifth pandemic wave due to the Omicron variant.
“Restarting student loan debt payments would take more than $85 billion dollars out of our economy next year,” said Sen. Elizabeth Warren (D-MA) in a tweet on Tuesday. “We’re still in a pandemic and people are still struggling. [The President] shouldn’t restart payments.”
Earlier this month, a coalition of over 200 civil rights organizations, labor unions, and consumer protection groups wrote to President Biden, urging him to extend the payment pause again. “In fewer than 60 days, tens of millions of student loan borrowers are slated to be thrown back into repayment on federal student loans they are ill-equipped to pay as the deadly COVID-19 pandemic continues to devastate Americans’ health and financial security,” wrote the coalition. “We… write to urge you to put a stop this crisis in the making before it begins and extend the current pause on student loan payments.”
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Biden Reportedly Considering Another Extension of the Student Loan Payment Pause
As first reported by POLITICO, the Biden administration is now actively considering extending the student loan payment pause again. White House Press Secretary Jen Psaki said on Tuesday that President Biden “has not made a decision yet,” indicating that a further extension is very much on the table. The comment is markedly different from earlier statements by the administration as recently as last week, when White House officials indicated that the administration was focusing on a “smooth transition to repayment” after the moratorium ends on January 31.
The abrupt shift in messaging may cause confusion for some borrowers. The Department of Education has been sending out mass emails to student loan borrowers warning them of the imminent return to repayment. And up through this week, key federal student aid officials have been continuing to amplify messages about the return to repayment. “Higher ed partners: Help spread the word!” said Federal Student Aid Director Richard Cordray in a tweet on Tuesday. “Encourage borrowers to contact their loan servicer to restart auto-debit or sign up for auto-debit for the first time.”
But advocates for student loan borrowers offered praise for the administration’s shift. “We are extremely encouraged to hear that President Biden is considering an extension of the federal student loan payment pause,” said Student Borrower Protection Center Policy Director and Managing Counsel Persis Yu in a statement. “Prior to the pandemic, federal student loans were crushing 43 million student loan borrowers, and the payment suspension has been vital to ensuring that those very borrowers can keep their head above water.”
“This is welcome news and would absolutely be the right call,” said Rep. Ayanna Pressley (D-MA) in a tweet. “Extending the pause will help millions of borrowers and their families weather this ongoing pandemic.”
No specific details have been released about a possible additional extension of the student loan pause, and no final decisions have been made. But officials indicated more information may be released by the end of the week.