Biden extends student loan payment freeze
Student loan pause extended until as late as June 30 amid court case
People worried about restarting student loan payments can rest a bit easier after President Joe Biden announced Tuesday he is extending the moratorium. The exact end of the pause is uncertain, but the freeze could last until June; it was scheduled to sunset Dec. 31. The move comes as Biden’s plan for wider student debt forgiveness is in court over claims the president overstepped his authority. Roughly 26 million people applied for relief before the plan was halted by a lawsuit.
WASHINGTON – The White House is extending the pause on student loan payments until as late as June 30, 2023, President Joe Biden said Tuesday, as his plan for wider student loan debt forgiveness remains tied up in the courts.
The pause had been scheduled to end on Dec. 31, but that date was coupled with plans for mass debt relief.
In a video message posted on Twitter, Biden defended his plan for farreaching student debt forgiveness and said the extension of the moratorium was a way to address the ongoing legal challenges. “I’m confident that our student debt relief plan is legal. But it’s on hold because Republican officials want to block it,” he said.
The exact end of the pause is uncertain. The Education Department said payments would start two months after litigation concludes or the mass debt relief program has been implemented. It could last until June 30, but borrowers won’t be required to make payments for an additional two months. The extension coincides with the end of the Supreme Court’s current session.
In the video message, Biden slammed “Republican special interests” that have successfully sued to halt his administration’s student debt cancellation program. The administration appealed to the Supreme Court to overturn a lower court’s injunction that ruled the debt forgiveness plan can not go forward.
“It isn’t fair to ask tens of millions of borrowers eligible for relief to resume their student debt payments while the court considers a lawsuit,” Biden said. “I’m never going to apologize for helping working-class and middle-class families recover from the economic crisis created by the pandemic.”
Roughly 26 million people have applied for student loan debt relief, and borrowers over the weekend received notices from the Education Department telling them their loans would be canceled if and when the litigation was resolved.
“I want borrowers to know that the Biden-Harris Administration has their backs and we’re as committed as ever to fighting to deliver essential student debt relief to tens of millions of Americans,” Education Secretary Miguel Cardona said.
The Education Department had warned that restarting payments without mass relief could result in a “historically large increase in the amount of federal student loan delinquency and defaults.”
The moratorium was first enacted under former President Donald Trump in March 2020, at the start of the coronavirus pandemic. In addition to waived payments, interest rates for federal student loans have been set at 0% and loan servicers have stopped trying to collect overdue debts.
When Biden in August extended the moratorium to the end of the year, he said it would be the last time the freeze was pushed back. But that was before setbacks in federal court for Biden’s student loan debt cancellation.
Borrowers making less than $125,000 a year – or $250,000 for married couples – qualify for the president’s plan. The payment pause, however, affects borrowers with federal loans regardless of their income.