According to a top White House official, the Biden administration is considering extending the federal student loan payment and interest moratorium for about 40 million Americans before it ends at the beginning of May.
Since March 2020, when Congress approved the CARES Act, the vast majority of federal student loans have had their monthly payments and interest halted. Executive action was employed by both the Trump and Biden administrations to extend such relief further.
Biden Is Still Considering Student Loan Relief
Per POLITICO, the most recent extension is due to end on May 2nd. Some failed loan collections have already been postponed until at least November, according to the Education Department. Only student loans held directly by the Education Department are affected by the payment freeze, which account for the vast majority of the $1.7 trillion in outstanding student loan debt. Borrowers with other federal or private student loans, however, are not protected by the Education Department's pandemic assistance.
Klain's comments are the most direct indication in recent weeks from any Biden administration official that the Education Department may prolong the hold on federal student loan payments and interest.
Progressives and other Democrats have raised political reservations about delivering student loan payments to tens of millions of Americans before the midterm elections this autumn, especially when prominent Democrats have promised debt forgiveness for years.
Biden extended the moratorium on federal student loan payments until May 1 in December, citing economic hardships caused by the coronavirus outbreak. During the early days of the outbreak, President Donald Trump imposed a moratorium. Over 40 million Americans have gone nearly two years without making minimum student loan payments or paying interest on $1.7 trillion in debt, according to USA Today.
Biden Administration Unveils Appeal Process
The Biden administration, according to White House press secretary Jen Psaki, "will continue to assess and review as we get closer to May." During his presidential campaign, Biden supported forgiving up to $10,000 in student debt for each borrower, though he has also stated that such a move would require congressional action.
Furthermore, according to a recent report from the Government Accountability Office (GAO), borrowers may face difficulties resuming repayment because the Department is having trouble communicating with borrowers after such a long hiatus - a problem exacerbated by the fact that the federal student loan servicing system has been undergoing significant changes as major contractors withdraw from the federal student aid system.
If Congress fails to approve a measure, the only way to accomplish widespread student loan forgiveness is for the president to act. Advocates for student loan debtors, including consumer rights organizations, student loan legal experts, and progressive senators, have contended that current federal law provides Biden broad legal power to erase federal student loan debt, particularly during a national emergency. Other legal professors and former
Department of Education officials, on the other hand, have expressed their disagreement with this view. Such legal power has never been employed on such a large scale before, and it has never been put to the test in federal court, as per Forbes.
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