The Biden administration on Wednesday announced that it will extend the pause on federal student loan payments to August 31, 2022. Biden also promised additional flexibilities and support for borrowers, but stopped short of committing to broad student loan forgiveness. Here’s the latest.
Student Loan Payment Pause Was Scheduled 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 government-held federal student loans, and stopped collections activity against borrowers in default on federal loans.
President Trump had originally suspended federal student loan payments and interest using executive action. Congress then codified that relief through passage of the CARES Act. Under that legislation, the student loan payment pause and interest freeze was supposed to last six months. But President Trump, and subsequently President Biden, extended it multiple times. Biden’s most recent extension was set to end on May 1.
While the Covid-19 pandemic has waned since the sky-high case numbers during the Delta and Omicron waves, Americans are now grappling with historic levels of inflation and rapidly climbing gas prices, partially related to the deepening conflict in Europe. Lawmakers and advocates for borrowers have been urging Biden to extend the payment pause in response to these crises.
“The payment pause has been a significant 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,” wrote top Democratic lawmakers in a letter to Biden earlier this week. “Restarting repayment will financially destabilize many borrowers and their families, and will cause hardship for many who could not afford repayment.”
Biden Further Extends Student Loan Payment Pause To August 31, 2022
The Biden administration announced on Wednesday that there would be an additional extension of the student loan relief to August 31, 2022.
“We are still recovering from the pandemic and the unprecedented economic disruption it caused,” said President Biden in a statement on Wednesday. “If loan payments were to resume on schedule in May, analysis of recent data from the Federal Reserve suggest that millions of student loan borrowers would face significant economic hardship.”
Advocates praised the move, although the short extension fell short of what many advocates had called for. Top Senate Democrats and advocacy organizations had called for an extension through 2023.
“We recognize that extending the payment pause is important to borrowers struggling to shoulder the harm caused by the pandemic, economic shocks, and inflation. However, President Biden’s piecemeal, short term approach is not enough to meet these challenging times,” said Natalia Abrams, President & Founder of the Student Debt Crisis Center in a statement.
Biden Promises ‘Additional Flexibilities’ For Borrowers But Does Not Specifically Mention Student Loan Forgiveness
Biden promised that there would be “additional flexibilities and support for all borrowers” when repayment does resume, and he said that the extension of the payment pause through August would allow the Department of Education to “continue improving student loan programs.” He did not specifically mention student loan forgiveness.
Advocates have been urging the Biden administration to use an extended student loan payment pause to enact major, lasting reforms and institute broad student loan cancellation. “Canceling a meaningful amount of student debt will provide long-term benefits to individuals and the economy, helping families buy their first homes, open a small business, or invest in their retirement,” wrote key lawmakers to Biden last week.
In March, Senator 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-driven repayment plan, extend the temporary expansion of the Public Service Loan Forgiveness (PSLF) program, and enact broader student loan forgiveness targeted for borrowers who need that relief the most. A bombshell report released by NPR this week exposed significant administrative problems plaguing the troubled income-driven repayment plan system.
“When I talk to student loan borrowers… one thing is painfully clear: the student loan system is broken,” said Senator Murray in a statement in March accompanying the release of her proposal. “It is ruining lives and holding people back. Borrowers are struggling with rising costs, struggling to get their feet back under them after public health and economic crises, and struggling with a broken student loan system—and all this is felt especially hard by borrowers of color.”
So far, the Biden administration has cancelled around $16 billion in federal student loan debt by relaxing rules and easing access to existing student loan forgiveness programs such as Public Service Loan Forgiveness (PSLF), disability discharges, and Borrower Defense to Repayment. But that figure amounts to a mere fraction of one percent of total outstanding student loan debt, and advocates had been urging Biden to go much further.
“The President has an opportunity to pass bold, meaningful relief instead of band-aid measures,” said Abrams. “We urge the President to consider the transformative effect permanent student debt cancellation would have for individuals, their families, and the economy.”
Further Student Loan Reading
4 Options For Biden To Legally Enact Student Loan Forgiveness Without Congress
Student Loan Relief: Advocates Ramp Up Pressure On Biden To Extend Payment Pause, Cancel Student Debt
Student Loan Forgiveness: Top Lawmakers Urge Biden To Cancel ‘Meaningful’ Amount Of Debt And Extend Payment Pause As Polls Show Support
Who Qualifies For $6 Billion In Student Loan Forgiveness Announced By Biden Administration