Under pressure from progressive Democrats, the Biden administration will extend the pause in federal student loan repayments until May 2022 — just weeks after the moratorium was due to expire.
At the onset of the coronavirus epidemic, the Department of Education suspended federal student loan payments and set interest rates at 0%. Federal borrowers were to resume their payments on February 1, 2022. Biden directed the Department of Education on his first day of office to suspend federal student loan repayments until September 2021. The pause was extended by the Biden administration from August to the end of next month.
Biden stated that his Administration extended the pause on federal student loans repayments for an additional 90-day period — through May 1, 2022 — to manage the ongoing pandemic, strengthen our economic recovery, and noted that the Department of Education would “continue working alongside borrowers to ensure they receive the support they require to transition smoothly into repayment and advance the economic stability of their households and our nation.”
The federal student loan repayments were halted to allow “41 million Americans the desperately needed breathing space during the economic turmoil caused by the global COVID-19 epidemic.”
Biden acknowledged, however, that millions of student loan borrowers are still dealing with the effects of the pandemic, and will need more time to resume payments. Biden stated that Vice President Harris is closely following this issue and it is one they both care deeply about.
The Biden administration indicated last week that they would continue to pay federal student loans at the end of January. This was in direct rejection of a progressive Democrats’ push to extend the pandemic relief program. Jen Psaki, White House press secretary, said that Biden did not intend to extend the February payment freeze. Instead, she stated that the administration is focusing on making sure there is a smooth transition into repayment.
Psaki said that federal student loan borrowers will be contacted directly to ensure they have the right repayment plans and the resources they require. “We are still evaluating the impact of this omicron variant.”
In a letter to the White House last week, Senator Majority Leader Chuck Schumer (D-N.Y.), Sen. Elizabeth Warren (D-Mass.), and Rep. Ayanna Pressley (D-Mass.) warned that millions could be financially harmed and that the recovery from the pandemic is at risk if the federal government does not lift the pause on student loans payments.
Schumer, Warren, and Pressley also called for Biden to cancel $50,000 of federal debt per borrower by executive order. Democrats maintain that Biden could make use of existing executive authority under Higher Education Act to direct the Department of Education “to modify, compromise, waive, or release student loans.”
Biden was a candidate for canceling student loan debt worth billions of dollars. However, he has only erased a small fraction of the amount pledged by about 72,000 borrowers. This angered progressive lawmakers who wanted him to go further left on the issue.
The outstanding student loan debt has risen by nearly $1.7 trillion in the last decade. One in six Americans owes money to federal student loan debt. This is the largest non-mortgage amount in the U.S. Federal Reserve Chairman Jerome Powell has cited it as a major obstacle to people’s “economic lives.”
In the case of student loan interest, the Education Department provided $72 billion in relief. Biden’s announcement is made amid an increase in COVID-19 cases.
The Centers for Disease Control and Prevention (CDC), announced this week that the omicron variant of coronavirus is now the dominant strain in the United States. It accounted for 73.2% of all new infections in the week ending Dec.18. This is an increase of 12.6% in the previous week.
Schools are shifting to remote learning across the country. Restaurants are closing their doors to the public and events are being canceled again due to the new omicron coronavirus variant. Broadway shows in New York City were canceled along with the Rockettes’ Christmas Spectacular shows. The National Hockey League announced a pause in its season.