Finance

Biden extends student loan freeze to May 1

President Biden on Wednesday extended the pandemic moratorium on federal student loan payments and interest accrual through May 1 amid surging cases of COVID-19.

The president announced the extension in a Wednesday statement that touted the strength of the economy during his first year in office but acknowledged the new threat posed by the omicron variant.

“Now, while our jobs recovery is one of the strongest ever, we know that millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments,” he said.

“Given these considerations, today my administration is extending the pause on federal student loan repayments for an additional 90 days — through May 1, 2022 — as we manage the ongoing pandemic and further strengthen our economic recovery.”

Those who owe student loans to the federal government have not been required to make payments on their debt since former President Trump initially issued the moratorium in March 2020. Trump’s order also froze the accrual of interest on federal student loans, effectively freezing $1.6 trillion in debt owed by more than 40 million Americans.

The moratorium was set to lapse on Jan. 31 per an extension signed by Biden in August, and the White House earlier this month all but ruled out another extension. But the president had faced growing pressure to extend the federal student loan freeze as COVID-19 cases began spiking earlier this month.

Omicron’s arrival has sparked a wave of event cancellations and postponements, scrapped travel plans, temporary business closures in hard-hit areas and fears of an economic slowdown. Omicron appears to spread far faster than previous variants, though health experts say those who’ve been fully vaccinated with boosters are still well-protected from severe disease.

“We know that, as was noted in the president’s statement, that a number of people, millions of people across the country are still struggling with the ongoing threat of the pandemic. Many of them are student loan borrowers. This is something the president thought a lot about over the last several days in coordination, and of course conjunction and discussion with the vice president, and it led to the decision to extend until May,” White House press secretary Jen Psaki told reporters during a Wednesday briefing.

Progressive lawmakers who urged Biden to extend the moratorium offered immediate praise, paired with another nudge toward unilaterally forgiving a significant chunk of the federal student loan balance sheet. 

“The pause on federal student loan payments, interest, and collections has improved borrowers’ economic security, allowing them to invest in their families, save for emergencies, and pay down other debt. Extending the pause will help millions of Americans make ends meet, especially as we overcome the Omicron variant,” Senate Majority Leader Charles Schumer (D-N.Y.), Sen. Elizabeth Warren (D-Mass.), and Rep. Ayanna Pressley (D-Mass.) said in a Wednesday statement.

“We continue to call on President Biden to take executive action to cancel $50,000 in student debt, which will help close the racial wealth gap for borrowers and accelerate our economic recovery.” 

While Biden said he would sign a bill forgiving up to $10,000 in federal student debt per borrower, he has ruled out going as high as $50,000. The administration has also expressed doubts about Biden’s authority to unilaterally cancel debt, and has refused to release an internal legal analysis requested by the president.

Biden’s reluctance to heed progressive pressure on student loan forgiveness is one of several reasons anger on the president’s left flank has grown, including the apparent collapse of his marquee domestic policy bill.

Psaki pushed back when asked if the lack of the votes on Biden’s Build Back Better agenda is the reason for extending the student loan, following Sen. Joe Manchin’s (D-W.Va.) opposition to the climate and social spending bill.

“Well, we would disagree with that characterization as I think nearly every member of the Democratic caucus would as well and we’re forging ahead to get it done,” she said.

“Obviously, we’re still battling a pandemic. We know that borrowers across the country — even as the economy has made progress — are still grappling with them and this will give them a little bit more relief, hence is why the president and the vice president have made this decision,” Psaki added.

Updated at 1:13 p.m.

Tags Ayanna Pressley Charles Schumer Donald Trump Elizabeth Warren Jen Psaki Joe Biden Joe Manchin

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