2 years ago
The White House plans to once again extend the moratorium on federal student loan payments, with an announcement set to come as soon as this week, according to people familiar with the matter.
Biden administration officials are considering furthering the policy begun as part of Covid pandemic relief until the end of August, those people said, though they caution that could still change. An August timeframe would be considerably shorter than what many Democrats have been requesting.
The pause on payments is currently set to expire May 1 and could impact more than 40 million Americans.
Biden administration officials signaled in recent weeks that they were likely to extend the relief, telling federal student loan servicers to hold off on sending notices to borrowers that their monthly payments would be starting.
A range of Democrats in recent weeks have urged the Biden administration to extend the pause on payments through at least the end of 2022, which would be long enough to avoid requiring borrowers to make payments just before the midterm elections.
Many progressives want the payment pause extended as a precursor to wide-scale debt cancellation that they want the White House to pursue through executive action. But other more centrist Democrats in Congress, some of whom are up for reelection this year, had also called on the Biden administration to at least extend the moratorium into next year.
Some Biden advisers have been reluctant to continue relief because they believe it undercuts the administration’s messaging on the strength of the economic recovery, though last month White House chief of staff Ron Klain signaled the White House would extend the freeze again.
The White House did not immediately respond to requests for comment.
Democrats and advocates for student loan borrowers have said that more relief is needed as Americans face higher costs as a result of rising inflation gripping the economy. But some economists have argued that the extension itself could add to the inflation crisis. The New York Fed warned in a report last month that it expected to see a “meaningful rise in delinquencies” on student loans when the federal relief expires.
Monthly payments and interest have been suspended on most federal student loans since March 2020 when Congress passed the CARES Act. Both the Trump administration and Biden administration subsequently used executive action to further extend that relief.
Republicans have been urging the Biden administration to restart student loan payments over concerns about the growing cost to taxpayers. The various extensions of the payment pause have cost more than $100 billion, according to Education Department estimates.
The Biden administration estimates that borrowers collectively save about $5 billion each month in interest that does not accrue on their loans.
Some private student lenders whose business has been harmed by the pandemic relief have been lobbying the Biden administration to end the program and restart federal student loan payments for many borrowers. They’ve called for a partial extension of the pandemic relief that is targeted only to borrowers who are struggling.
English (US)