Biden ponders ways to support student loan borrowers when payments resume

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The Biden administration is contemplating ways to secure support for borrowers when federal student loan payments resume in September as Democrats in Congress push for an extended pause in payments and urge President Biden to unilaterally write off up to $ 50,000 in debt per borrower.

The Department of Education suspended the payment of federal student loans in March 2020 with the onset of the coronavirus pandemic and set interest rates at 0% during the hiatus. Federal borrowers are due to resume payments on October 1.

WARREN, SCHUMER PRESS OFFER FOR EXTENSION OF PAUSE IN FEDERAL STUDENT LOAN PAYMENTS

A Biden administration spokesman told Fox News on Wednesday that the pause was intended to support borrowers affected by the pandemic and its economic fallout, but noted that the US economy is progressing and recovering every day.

The official added that the administration is still aware of the implications for individual borrowers and families, saying the Education Department is working to ensure that borrowers who are still grappling with the economic fallout from the pandemic receive support when the payment pause expires in September. thirty.

But dozens of Senate Democrats are calling on President Biden to extend the federal moratorium on student loans for at least six months.

Last week, 64 lawmakers called on the president to take action before the September 30 deadline and asked for the pause to be extended until March 31, 2022, or until the economy returns to pre-crisis levels, whichever is longer.

The effort was spearheaded by Senate Majority Leader Chuck Schumer, Massachusetts, and Senator Elizabeth Warren, Massachusetts, as well as representatives Ayanna Pressley, Massachusetts, and Joe Courtney, Connecticut.

“The suspension of payments and interest during the pandemic has provided significant relief to borrowers and their families during this economic and public health crisis,” the letter said. “However, the resumption of payments will be a serious problem for borrowers, lenders and the Ministry of Education, and we urge you not to suspend payments when borrowers are still dependent on this financial assistance.

“The wave of student loan defaults will cause long-term damage to the credit and financial stability of borrowers and could suddenly and unnecessarily slow down a recovering economy,” they wrote.

CANCELLATION OF STUDENT LOAN WILL BE INEFFECTIVE TO SUPPORT THE ECONOMY, the study shows.

MPs said the Department of Education provided $ 72 billion in aid just to pay interest on student loans. About 41 million Americans are benefiting from the federal government’s suspension of student loan payments, which has already been extended twice.

Earlier this month, Education Minister Miguel Cardona said in a Senate speech that the administration “had no statements” that officials were continuing to talk about a possible extension of the pause in payments.

Schumer and Warren are some of the lawmakers who have advocated for Biden to cancel the $ 50,000 outstanding federal debt for each borrower on borrowers, with Schumer pledging this week to “keep pushing” him to do so.

“With Joe Biden in the White House and Democratic majorities in the House and Senate, it’s time to act,” Schumer said this week.

But the White House insists that the main action to cancel the loan should go through Congress.

An administration official told Fox News that the president is backing Congress by providing $ 10,000 in debt relief to each borrower and is continuing to explore what debt relief measures can be taken administratively.

Democrats in Congress, however, argued that Biden could have used existing executive powers under the Higher Education Act to order the Department of Education to “change, compromise, refuse, or release” student loans.

“The Department of Education is working in partnership with colleagues from the Department of Justice and the White House to consider debt relief options, which is an ongoing process,” an administration official told Fox News.

Outstanding student loan debt has doubled over the past decade, approaching a staggering $ 1.7 trillion. Roughly one in six American adults is in debt on a federal student loan, which is the largest amount of non-mortgage debt in the United States.

Megan Henney of Fox Business contributed to this report.

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