WASHINGTON, DC – AUGUST 9: U.S. President Joe Biden speaks before signing the CHIPS and Science Act … [+]
The Biden administration appears to be increasingly likely to extend the student loan pause, which is currently set to end in just 22 days. Meanwhile, congressional Republicans filed a bill to end the student loan relief and restart payments for millions borrowers.
Here’s the latest.
Biden May Extend Student Loan Pause To End of 2022 or Into Next Year
Payments on government-held federal student loans have been suspended since March 2020 under the CARES Act, which Congress passed in the early months of the coronavirus pandemic. The legislation also suspended interest accrual on government-held federal student loans, and stopped collections activities against defaulted borrowers.
Congress originally envisioned a six-month pause on student loan payments when it passed the legislation, but the relief has been extended several times (often at the last minute) by both President Trump and President Biden. August 31 is the latest deadline for the expiration of the student loan pause.
The Biden administration appears increasingly likely to extend the student loan pause yet again as Americans continue to grapple with historically high inflation. Last month, the administration reportedly notified student loan servicing companies contracted with the U.S. Department of Education to hold off on sending billing notices to borrowers, a clear signal that officials do not expect payments from borrowers in the near-term. Top officials from the Education Department and White House, including the Secretary of Education, have emphasized in recent months that borrowers would have plenty of warning before student loan payments resume.
Recent reports suggest that Biden is mulling an extension to at least the end of 2022, and possibly into the summer of 2023. Notably, July 1, 2023 will be a critical date for student loan borrowers, as an overhaul of key federal student loan repayment and loan forgiveness programs is expected to be in effect by then. The Education Department released proposed new regulations governing this overhaul last month, and details on a new income-driven repayment plan may be released within weeks.
Republicans Introduce Bill To End Student Loan Pause
Last week, Republicans in Congress led by Reps. Virginia Foxx, Elise Stefanik, and Jim Banks introduced legislation intended to stop Biden. The Responsible Education Assistance Through Loan (REAL) Reforms Act would rescind the student loan pause originally allowed by the CARES Act, effectively forcing borrowers back into repayment again. The bill would also end the popular but troubled Public Service Loan Forgiveness (PSLF) for new borrowers, and would end student loan forgiveness associated with income-driven repayment plans.
The REAL Reforms Act would also include other student loan reforms that could be popular with borrowers, including simplifying income-driven repayment plans, capping interest accrual, and providing more flexibility to use PELL Grants (which students do not have to repay).
“The Biden administration has been engaging in mass student loan forgiveness behind Americans’ backs without the authorization of Congress,” said Reps. Virginia Foxx, Elise Stefanik, and Jim Banks in a joint statement. The representatives argued that the ongoing student loan pause has resulted in “de facto loan forgiveness of at least $5,500 to every borrower” in the form of paused payments and interest.
“Instead of placing the burden of this broken student loan system on the shoulders of American taxpayers, we are introducing this bill to fix the system,” they said.
What’s Next For the Student Loan Pause and Other Student Loan Relief
The Republican bill has little to no chance of passing in either the House or the Senate, where Democrats hold slim majorities. And polling shows another extension of the student loan pause would be popular with voters. In a Morning Consult/Politico poll from March, only one-third of respondents would oppose an extension. An extension of the student loan pause appears to be particularly popular among younger voters, with 56% of respondents ages 18-34 in favor.
Biden could make an announcement on a further extension of the student loan payment pause any day. Biden has also indicated that he will make a final decision on enacting broad student loan forgiveness by the end of August, as well.
Further Student Loan Reading
5 Growing Signs Biden May Approve Broad Student Loan Forgiveness And A Student Loan Pause Extension
Biden Administration Is Ready To Implement Mass Student Loan Forgiveness, As Decision Could Come Any Day
Did The Biden Administration Just Drop A Big Hint On Student Loan Forgiveness?
If You Went To These Schools, You May Qualify For Student Loan Forgiveness: Here’s What To Do