President Joe Biden extended the freeze on federal student loan repayments until August 31, pushing the pause to early September. This is the sixth extension of the student loan moratorium.
“We are still recovering from the pandemic and the unprecedented economic disruption it has caused,” President Biden said in his press release. “If loan repayments were to resume on schedule in May, analysis of recent Federal Reserve data suggests that millions of student borrowers would face significant economic hardship, and that delinquencies and loan defaults could threaten the financial stability of Americans.”
The freeze suspends payments for millions of Americans, who collectively saved nearly $200 billion during the moratorium, according to an analysis by the Federal Reserve Bank of New York.
The extension of the moratorium follows calls from top Democrats who have urged President Joe Biden to extend the student loan repayment pause and provide “meaningful” debt forgiveness. They include Senate Majority Leader Chuck Schumer, Sen. Elizabeth Warren and Rep. Pramila Jayapal, chair of the Congressional Progressive Caucus. The letter calling on the White House to further suspend student loans surfaced after Biden announced his budget proposal for fiscal year 2023, which did not mentionor an extension of the federal student loan repayment break.
“Recent comments from White House Chief of Staff Ron Klain on the possibility of extending the payment pause and administratively canceling student loan debt are heartening for millions of borrowers across the country,” says the letter. “While there may be different ideas on how best to structure cancellation, we all agree that you should cancel student debt now.”
The letter refers to comments Klain made during a podcast on March 3, where he said Biden would decide whether to cancel student debt before the break expires or extend the deferment. The following week, Department of Education officials began asking companies handling federal student loans to suspend sending notices about resuming payments, as Politico first reported.
“Restarting repayment will financially destabilize many borrowers and their families, and cause hardship for many who cannot afford to repay,” the letter said.
What you need to know about the federal student loan payment break
During the campaign, Biden said he would support legislation canceling a minimum of $10,000 in federal loans per borrower. However, the White House has remained largely silent on the issue since Biden took office, although the Department of Education has taken action on this front over the past two months.
Following the Ministry’s overhaul of itsin October, 70,000 borrowers saw their student loans extinguished, collectively reaching almost $5 billion in January. Subsequently, in March, the Department announced that about 30,000 more people had been found eligible for relief under the civil service loan forgiveness waiver.
It remains unclear whether Biden has the legal authority to unilaterally cancel student debt through executive action, without congressional legislation. The Department of Education released a memo (PDF) on this issue last year, but the heavily redacted document offers little information for the public eye.
How did we come here?
Federal student debt repayments have been suspended for two years now. Since the pause was first enacted, interest has not accrued and collections on defaulted debts have been suspended.
Former President Donald Trump first declared a student loan suspension in March 2020 and extended it until January 2021. Bidenthree more after taking office, with his administration warning that the January 2022 extension would be the last.
However, with the omicron variant of COVID-19 sweeping the United States last year, the Biden administration decided to extend the moratorium on student loan repayment until May 1, 2022.
Now Biden has again extended the loan repayment freeze, suspending payments until the end of the summer.
“This additional time will help borrowers achieve greater financial security and support the Department of Education’s efforts to continue improving student loan programs,” Biden said.