Biden extends pause on student loan payments to 2022
The Biden administration is extending the pause on federal student loan payments due to the coronavirus pandemic through Jan. 31, which the administration described as the final extension.
Student loan payments have been paused since Congress passed the CARES Act in March of last year but were due to resume in September. During the pause, borrowers do not need to make payments and interest will not accrue on their remaining balance.
The Education Department described it as a “final extension of the pause” in the official announcement Friday afternoon. The administration said that the additional time will give borrowers the opportunity to plan for the resumption of loan payments, thereby reducing the risk borrowers will be delinquent or default on their loans. The new extension gives borrowers six months until payments will resume.
“The payment pause has been a lifeline that allowed millions of Americans to focus on their families, health, and finances instead of student loans during the national emergency,” Education Secretary Miguel Cardona said in a statement.
“As our nation’s economy continues to recover from a deep hole, this final extension will give students and borrowers the time they need to plan for restart and ensure a smooth pathway back to repayment,” Cardona said.
President Biden had extended the pause until September when he took office in January.
“The pause has been a critical lifeline so they don’t have to choose between paying for basic necessities or their student loan during the pandemic that upended their lives,” Biden said in a statement Friday evening.
“As today’s jobs numbers show, we have the tools that will allow us to beat COVID-19 and keep our economy recovering at a record rate,” he continued, referencing the strong July jobs report. “But we know there is more work to do and the road will still be long for many people – especially for the one in six adults and one in three young people who have federal student loans.”
Some Democrats reacted to the news by saying that it doesn’t go far enough, including Senate Majority Leader Charles Schumer (N.Y.).
“While this temporary relief is welcome, it doesn’t go far enough. Our broken student loan system continues to exacerbate racial wealth gaps and hold back our entire economy,” Schumer, Sen. Elizabeth Warren (D-Mass.) and Rep. Ayanna Pressley (D-Mass.) said in a statement.
Biden has faced pressure from progressive lawmakers to cancel up to $50,000 per borrower of federally held student debt via executive order.
“We continue to call on the administration to use its existing executive authority to cancel $50,000 of student debt. Student debt cancellation is one of the most significant actions that President Biden can take right now to build a more just economy and address racial inequity. We look forward to hearing the administration’s next steps to address the student debt crisis,” the lawmakers said.
It’s unclear, however, if Biden has the legal authority to do so and House Speaker Nancy Pelosi (D-Calif.) argued recently that he does not and that Congress would need to pass a bill.
Last month, the Education Department canceled about $56 million in student loan debt from 1,800 borrowers. The administration has canceled $1.5 billion in student loan debt in total.
Republicans, meanwhile, criticized the move on Friday.
“This extension does a grave disservice to borrowers across the country, and our children will pay the ultimate price for this irresponsible delay,” said Rep. Virginia Foxx (R-N.C).
“Secretary Cardona is using the permanent pandemic narrative to wield power rather than enact responsible solutions to help borrowers get back on track. I regret that Secretary Cardona did not show real leadership by working with Congress to transition responsibly the portfolio back into repayment by Oct 1 of this year. It is nothing less than a dereliction of duty.”
Updated: 6:30 p.m.