White House set to extend student loan payment pause

The Biden administration is gearing up to once again extend the suspension of federal student loan payments, giving tens of millions of borrowers another reprieve weeks before bills would have been due, according to federal officials familiar with the matter.

An announcement could come as soon as Wednesday.

Two of the people said the White House is considering extending the pause through August but stressed the final details are still up in the air. The officials were not authorized to speak publicly.

Both the department and the White House declined to comment Tuesday.

The Education Department had been set to resume payments in May, two years after the moratorium was first instituted in response to the economic upheaval caused by the pandemic. The widely anticipated extension means some 41 million people will continue to spend the next few months without interest accruing on their debt and with more time to save money.

If the administration does land on an August extension, it would be far shorter than what congressional Democrats want. Liberal leaders have urged the administration to extend the pause through at least the end of the year, arguing the resumption of payments would financially destabilize many borrowers who are not prepared to shoulder another bill amid skyrocketing costs for food and gas. Some are pressing Biden to cancel some portion of the $1.7 trillion dollars in outstanding student debt through executive action.

“Extending the moratorium is not enough. We need to forgive student debt,” said Rep. Ro Khanna (D-Calif.). “There is no constitutional difference between forgiving interest and forgiving the student loan itself.”

Sen. Patty Murray urges Biden administration to extend pause on student loan repayments to 2023

While the President has indicated he is open to legislative proposals on debt cancellation, he has focused on targeted relief, providing about $16 billion in loan forgiveness to more than 680,000 borrowers who meet certain criteria, such as being defrauded by their colleges.

“Frankly, four months is not enough time to fix a system that has been broken for decades,” Abby Shafroth, interim director of the National Consumer Law Center’s Student Loan Borrower Assistance Project. “The Biden Administration has begun work on important systems reforms, but these solutions are still being ironed out and won’t be ready to implement by August.”

News of the impending extension has rattled Republicans, who have opposed the move as an unnecessary giveaway at a time when President Biden claims the economy is on solid footing.

Rep. Virginia Foxx (NC), the top Republican on the House Education and Labor Committee, called the impending extension “outrageous.”

“Taxpayers have been footing the student loan bill for graduate students and Ivy League lawyers to the tune of $5 billion every month while their wallets are being drained by skyrocketing inflation,” Foxx said in a statement Tuesday. “The arrogance of this administration is astonishing. This isn’t about the pandemic … it’s about setting the stage for blanket loan forgiveness.”

The White House had signaled another extension which was in the works. In an appearance on the podcast “Pod Save America” in early March, White House Chief of Staff Ron Klain said the president would decide whether to use his executive authority to cancel student debt “before the pause expires, or he’ll extend the pause.” Days later, the Education Department told student loan servicers who manage its portfolio to stand down on sending notices to borrowers about the May resumption.

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