With the 18-month suspension of federal student loan payments ending just 90 days later, there are growing signs that President Biden may extend the moratorium beyond its current term.
The CARES Act, an incentive bill passed by Congress last year in response to the pandemic, temporarily halted all payments on state federal student loans, froze interest, and suspended all fees. The suspension of the broad student loan was supposed to last six months, but has since been extended several times by both former President Trump and President Biden since taking office. The current extension of the moratorium expires on September 30, 2021, which means that millions of student loan borrowers will resume payments in just a few months.
So far, the Biden administration has not announced a further extension of the deadline. And it is possible that student loan borrowers will indeed need to resume payments in October. But a further extension of the pause with the payment of the student loan is still quite possible. That’s why.
Constant pressure to extend the suspension of student loan payments
Student loan borrower activists and advocacy groups are sounding the alarm over the rapidly approaching expiration of a student loan moratorium. They have three main arguments:
- Millions of student loan borrowers will not be able to sharply resume payments this fall, given the ongoing pandemic and uneven economic recovery. BUT interview A study by Student Debt Crisis and Savi found that 90% of student loan borrowers are not ready to resume payments in October.
- Student loan services will be overwhelmed and unable to process millions of borrower accounts while simultaneously renewing payments in an unprecedented manner.
- Key federal student loan programs have historically been very poorly managed by the credit services and the US Department of Education. causing massive harm to borrowers… These programs need to be fixed – and at least some student loan arrears should be canceled – before forcing borrowers to resume repayment.
Coalition of these organizations sent a letter President Biden last week, urging him to extend the moratorium.
Influential Democrats in Congress have also stepped up pressure. Last week, Senator Elizabeth Warren, Massachusetts, joined several progressive allies in calling on President Biden to extend the student loan moratorium. until March 2022 or later… They were recently joined by other influential Democrats, including Senator Patty Murray (D-WA) and Bobby Scott (D-VA), chairmen of the Senate and House of Representatives education committees, who sent Biden their own letter.
The moratorium on student loan payments is easy to extend
Last month, the Department of Education initiated a series of public hearings, the first step in a comprehensive overview and possible overhaul major federal student loan programs such as income-based repayment plans, government service loan forgiveness, disability statements, and borrower-to-maturity protection. Many of these programs have suffered from administrative and bureaucratic problems for years. But the process of reforming federal student loan programs through a regulatory process is extremely slow and tedious, requiring constant stakeholder and public participation. The revised rules are likely to be implemented in a few years.
On the other hand, extending the student loan moratorium is easy – it can be done with simple administrative measures, as President Biden did on his first day in office in January. And the benefits of the extension will be immediately felt by millions of borrowers.
Extended pause in student loan repayment will buy time for broader reform
The Biden administration only recently completed appointments to key positions in the US Department of Education with Richard Cordray. knocked run the federal student assistance system in May. Advocacy groups argue that the moratorium on student loans should be extended to give the administration more time to implement key reforms such as the following:
- 90-day audit “broken”Public Service Loan Forgiveness and Automatic Student Debt Forgiveness Program for borrowers who have served ten or more years in the public service, regardless of their specific compliance with the complex eligibility criteria for the program.
- Expansion of Benefits for the “Protect Borrowers for Repayment” program, which provides for forgiveness of student loans to borrowers who have been defrauded by their schools. The Biden administration recently chipped off into the stricter rules imposed by former Education Minister Betsy DeVos and began to provide broader assistance to more borrowers… But tens of thousands of applications for protection from borrowers remain unfulfilled.
- Automatic resolution of borrowers’ problems on their federal student loans, as the CARES Act provides that months of suspended payments will count towards loan recovery as if payments were being made.
- Widespread Student Loan Cancellation – The Biden administration is conducting legal due diligence to determine if the president has the authority to unilaterally cancel student loan debt on a broader scale through executive action. The results of this review are still ongoing, but may be released soon…
Biden Administration Opens To Further Extension Of Student Loan Moratorium
The Biden administration has several times proposed extending the suspension of student loans. At a public event in May, Education Minister Miguel Cardona said: “We’re looking at this. Obviously, we will always be guided by what the data tells us and where we are as a country in regards to pandemic recovery. [A further extension] it is not excluded. ” More recently, Cardona said last week: “We are aware of the impact of the pandemic on our borrowers. And we have already talked a lot about extending the pause ”.
However, the administration has not definitively announced the upcoming extension of the deadline. And the officials did not indicate when the final decision could be made or announced. In the meantime, student loan borrowers should plan to resume repayment in October, but stay tuned for further developments.