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Extend Student Loan Pause To 2023? Biden May Do It.

    Extend Student Loan Pause To 2023? Biden May Do It.

    A top Democrat is urging President Biden to extend the ongoing student loan pause — and there are growing signs that Biden might do it. Here’s the latest.

    Student Loan Payments Have Been Pause For Two Years

    Most federal student loan payments have been suspended since March 2020. President Trump initiated a brief payment pause for student loans in response to the Covid-19 pandemic, which was then codified into law by Congress through the CARES Act. That legislation also temporarily set most federal student loan interest rates to zero, and stopped all collections efforts on most defaulted federal student loans.

    The CARES Act’s relief was originally supposed to last six months. But as the pandemic and economic fallout expanded, President Trump extended the relief several times. President Biden followed suit and extended the relief again when he took office. Now, most federal student loan borrowers have not had to pay anything on their loans for over two years. Biden’s most recent extension is scheduled to end on May 1, 2022.

    Advocates Urge Biden To Extend the Student Loan Pause Again And Enact Student Loan Forgiveness

    A growing chorus of advocacy organizations and elected officials are urging the Biden administration to extend the pause again.

    Earlier this month, a coalition of 210 organizations including civil rights groups, labor unions, and borrower advocates sent a letter to President Biden urging him to extend the payment pause. “The student loan payment pause has been one of the most important investments the federal government has made in Americans’ financial lives in a generation,” wrote the coalition. “It is critical that your administration continue to deliver on your promises made to student loan borrowers and their families.”

    Last week, Senator Patty Murray (D-WA), Chair of the powerful Senate Committee on Health, Education, Labor, and Pensions, called on Biden to extend the student loan payment pause to 2023. Citing ongoing economic pain experienced by millions of Americans due to rising costs, Murray also urged Biden to use the extended pause to fix the student loan system by creating a new, more affordable income-driven repayment plan, automatically bringing borrowers out of default, and enacting broad student loan forgiveness for key borrowers.

    “This loan system is unacceptable and we can fix it. When you get a loan to afford higher education, you deserve a system that works. It should be easy to enroll in a sensible repayment plan, no one should end up with a monthly payment they can’t afford, and debt relief shouldn’t require making it through a gauntlet of paperwork,” said Murray in a statement last week. “This is not too much to ask — so until we fix our student loan system, the student loan payment pause must continue to provide borrowers much-needed relief.”

    Surveys show a majority of borrowers support extending the pause again, and abruptly resuming repayment could potentially impact the midterm elections. A poll conducted last month by Data for Progress suggests that borrowers continue to worry about their ability to resume repayment, and over six in ten respondents expected “major changes” to their savings or spending habits if repayment on student loans restarts this spring.

    Growing Signs that Biden May Extend The Student Loan Pause

    For weeks, there have been growing signals that the Biden administration may actually extend the student loan pause again. White House Press Secretary Jen Psaki used the word “if” in February when she was describing when (or whether) student loan repayment would resume this spring. In early March, White House Chief of Staff Ronald Klain expressly said in an interview posted by Pod Save America that Biden is considering a further pause while also potentially exploring additional relief for student loan borrowers, including student loan forgiveness. And as first reported by Politico, the Department of Education quietly instructed its loan servicers this month to stop sending correspondence to borrowers about resuming repayment.

    While the Biden administration has not speculated on a specific length or end-date of another extension of the payment pause, extending it to 2023 would get the administration through the midterm elections in November, which could be a consideration.

    Still, extending the pause further does not necessarily enjoy universal support. Two House Republicans introduced a bill to force the restart of student loan payments. It has virtually no chance of passing the Democratic-controlled House, but it is indicative of the ongoing debate about how to handle student loan repayment.