Biden extends student loan repayment pause as courts assess debt relief


The Biden administration announced on Tuesday it will again extend a pandemic-era pause on federal student loan payments as courts weigh the fate of its debt forgiveness program.

The payment pause, which was first implemented under the Trump administration and extended several times, was due to end on December 31st. Officials had hoped to have canceled some of the debt by then so that borrowers’ balances would be lower, or in some cases wiped out completely, before payments resumed.

But Education Secretary Miguel Cardona says the department will again extend the recess until the courts restore Biden’s debt relief package or resolve pending lawsuits.

Payments will resume 60 days after the department is allowed to implement the program or the dispute is resolved, officials said. If that hasn’t happened by June 30, payments will resume 60 days later or September 1, the department said.

“The ruthless efforts to block student debt relief in court have caused tremendous financial uncertainty,” Cardona said in a statement Tuesday. “We are extending the payment pause because it would be deeply unfair to ask borrowers to pay debt that they would not have to pay, but for the baseless lawsuits brought by Republican officials and special interests.”

The extension comes as Biden pursues multiple lawsuits seeking to overturn one of his signature economic policies.

The Biden administration last week asked the Supreme Court restore his plan forgive up to $20,000 in federal student loans debt for over 40 million borrowers. The United States Court of Appeals for the 8th Circuit had granted a request by a coalition of six Republican-led states to impose an injunction on the plan amid ongoing litigation.

In a separate case, a Texas federal judge on November 10 declared the forgiveness plan illicit. The Justice Department asked the United States Court of Appeals for the 5th Circuit to stay that decision while the court considers the merits of the administration’s appeal. Lawyers for the administration asked the court for a final decision by December 1.

Legal battles have left millions of student borrowers in the lurch. More than half of those eligible had applied for Biden’s loan cancellation program before it was halted, with the Department of Education approving some 16 million applications. Despite the program being suspended, the department over the weekend notified people that their claims had been approved, assuring them that the administration would pay the debt if it won in court.

Civil rights groups and anti-debt activists urged Biden to refrain from restarting loan repayments while the debt relief program is in play. White House press secretary Karine Jean-Pierre told reporters on Monday that the administration was examining all options.

“In the face of extreme greed and hypocrisy from the far right, President Biden today stands up for all Americans – middle-class and low-income families – who bear the heavy burden of student debt” , said NAACP President Derrick Johnson. said Tuesday in a statement. “The impact this extension will have on the lives of those who have been targeted by predatory student loans cannot be overstated.”

The extension means borrowers with student loans held by the Department for Education will continue to have their payments suspended without penalty or accrual of interest for the duration of the moratorium. Collections on defaulted loans will still be halted, and any borrowers with defaulted federal loans whose wages are garnished will receive a refund.

The moratorium was first instituted in 2020 due to the economic dislocation caused by the pandemic and has been extended twice by the Trump administration and now six times by the Biden White House.

“Borrowers are drowning in student loan debt and the Biden administration is throwing them a lifeline as we fight MAGA Republicans in court,” said Senate Majority Leader Charles E. Schumer (DN. Y.) in a statement. “The pause in payments and interest gives student borrowers more opportunity to pay down their debt and reach life milestones like opening a savings account, buying a home, and savings for retirement.

The Committee for a Responsible Federal Budget, a DC-based think tank, estimates that extending the 60-day break beyond June 30 would cost $40 billion, or $5 million a month in lost interest revenue. . That would bring the total cost of the student debt break to $195 billion, according to the group.

“It’s not the kind of politics the taxpayers ordered, but it’s all on the menu of the Biden administration,” said Rep. Virginia Foxx (NC), the House Education Committee’s top Republican. . “We need sound, fiscally responsible policies — not haphazard decisions by this White House.”

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