Last week, President Biden announced another extension of the ongoing pause on student loan payments and interest accrual.
For over two years, student loan repayment has been suspended and interest has been frozen. The relief — first codified by Congress through enactment of the CARES Act in March 2020 — was supposed to last just six months. But President Trump, and then President Biden, issued multiple short-term extensions. Biden’s most recent extension to August 31, 2022 added yet another four months to the pause.
But there’s reason to believe that student loan payments won’t actually restart even in September. And there’s a pretty good chance that the payment pause will be extended yet again, perhaps to the end of the year or beyond. Here’s why.
Student Loan Payments Unlikely To Resume Right Before Midterm Elections
Restarting student loan payments just two months before major national elections could be politically disastrous for Democrats. The November elections will determine which party controls the House and the Senate. Democrats currently hold only narrow majorities in both chambers, and the party that holds the White House typically loses seats in Congress in midterm elections.
A poll released last month by Data for Progress and the Student Borrower Protection Center (SBPC) showed that a majority of borrowers supported extending the student loan payment pause to at least the end of 2022. Another poll released by the same organizations similarly suggested that voters may be less likely to vote in the midterms if the administration fails to provide adequate relief to student loan borrowers.
Biden Officials Suggested That Another Extension of the Student Loan Pause Is A Real Possibility
Statements made by top Biden officials in the last week clearly indicate that the administration does not necessarily view the August 31 extension as the final one.
In response to a press question about whether the President would extend the relief again beyond August 31, White House Press Secretary Jen Psaki told reporters last week the Biden administration would “continue to assess” key financial metrics “including costs and inflation.” She said, “The Department of Education will look at that and a range of factors as we get closer” to August.
Similarly, Secretary of Education Miguel Cardona said in an interview last week in regards to a further extension, “We’re going to continue to monitor it. Right now, we have August 31 and as you’ve seen in the past, we’ve been comfortable moving that date if needed.”
Others Agree Another Extension of the Student Loan Payment Pause is Likely
There are other indications that the Biden administration may extend the student loan pause again beyond August 31.
SoFi, one of the largest student loan refinancing companies and a strong proponent of ending the student loan pause, indicated in updated financial guidance that it “assumes that the student loan moratorium will not in fact end during the course of 2022…. Management now expects that a number of factors including the impending fall midterm elections will precipitate a likely seventh extension beyond August 2022 by the [Biden] Administration.”
Key members of Congress have also been pushing for a longer extension of the student loan payment pause at least through the end of the year. In particular, Senator Patty Murray (D-WA) — who holds a key position as Chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee — has urged Biden to extend the payment pause until 2023 to allow the administration to complete its overhaul of key federal student loan programs, including income-driven repayment and public service loan forgiveness.
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