WASHINGTON — President Joe Biden plans to extend the moratorium on federal student loan payments until August 31, the Associated Press reported, citing a federal official. For millions of Americans, student loan limbo will continue for the next three months.
The move will mark the fifth extension since the pause took effect in March 2020. This time, inflation is rising and gas prices are rising in connection with Russia's invasion of Ukraine. All the while, the nation's $1.7 trillion student loan loan portfolio continues to grow, with no concrete direction for the debtor.
The Department of Education has previously said the freeze saves 41 million borrowers about $5 billion per month.
Although borrowers are likely to appreciate the extra wiggle room, many have become frustrated with continued expansion without a plan for a comprehensive waiver. Politicians, both conservative and liberal, are expected to play down the actions of the Biden administration.
Some Democratic lawmakers, including Senate Majority Leader Chuck Schumer and Senator Elizabeth Warren of Massachusetts, are pressing Biden to use his executive authority to cancel up to $50,000 in student loan debt per borrower. As recently as March 31, dozens of Democratic lawmakers sent a letter to the president urging him to extend the pause until the end of the year and provide "meaningful student loan cancellation facilities."
But Biden has said he believes such an action should come from Congress. It's likely an uphill battle with an equally divided Senate and Republicans widely opposed to loan forgiveness. The president campaigned for debt forgiveness of up to $10,000 per borrower.
Conservative advocacy groups led by Grover Norquist's Americans for Tax Reform say the moratorium has been overly generous for those with student loan debt at the expense of those without higher education. He sent a letter to Education Secretary Miguel Cardona on March 8, urging him to address the national deficit and resume payments as a way to tackle inflation.
Meanwhile, borrowers are pushing for their pleas for a comprehensive loan waiver.
On Monday, borrowers from California, Florida, New York, Massachusetts, Ohio and Pennsylvania traveled to Washington to pressure the president to cancel student loan debt. They gathered outside the Department of Education with signs that read, "Can't pay, won't pay," or "You don't owe a loan." Debt Collective, an advocacy group focused on debt cancellation, arranged the program.
Borrowers in the demonstration said stopping payments helped them, but they wanted to cancel for a longer period of time. He said that frequent expansions make it difficult for them to plan.
"Pause doesn't change the fact that it's still not affordable," said Elisha DeJesus, 27, a Massachusetts physician for children.
DeJesus has about $40,000 in student loan debt. It said it would be a struggle to resume payments given the recent inflation. She is also paying more for gas as she returns to work at the office.
Despite the resumption of payments, the government may face challenges in resuming its payments to borrowers. A January report from the Government Accountability Office found that nearly half of the 42.3 million borrowers covered by the freeze are at high risk for delinquency.
The at-risk group includes people who were delinquent on their loans before the freeze, who dropped out of college and graduated within the past three years, who had not made any loan payments to the freeze.
While it's unclear whether the president will eventually wipe out student loan debt en masse, the Department of Education has taken some steps to offer permanent relief to borrowers. The agency is on track to clear more than $17 billion owed to borrowers since Biden took office. This forgiveness has come through the expansion of existing loan forgiveness programs, such as those for borrowers who are permanently disabled or were defrauded by their schools.
For example, the department recently announced that it has identified nearly 100,000 borrowers who would benefit from changes announced in the Public Service Loan Forgiveness Program in October. This will clear the debt of about $6.2 billion of the affected borrowers. And the government sent another $415 million to the 16,000 students duped by for-profit universities.