WASHINGTON — President Joe Biden on Wednesday introduced an extension of the cost pause on federal student loans via Aug. 31.
The moratorium on student loan funds was beforehand set to run out on May 1.
“I know folks were hit hard by this pandemic. And we’ve come a long way in the last year. We’re still recovering from the economic crisis it caused,” Biden stated in a video assertion. “This continued pause will help Americans breathe a little easier as we recover and rebuild from the pandemic.”
Biden had been going through strain from some Democrats and debt reduction advocates to subject one other extension on student loan funds as main legislative priorities — resembling his Build Back Better agenda and voting rights — stay stalled in Congress, and as issues about inflation and rising gasoline costs grip the nation.
Some Democrats have additionally argued that permitting funds to restart forward of the November midterm elections might come at a political value for the celebration because it tries to defend its slim majorities within the House and the Senate, and had urged the White House to increase the moratorium via the tip of the yr.
Responding to a report Tuesday that the pause can be prolonged, Rep. Alexandria Ocasio-Cortez, D-N.Y., tweeted, “I think some folks read these extensions as savvy politics, but I don’t think those folks understand the panic and disorder it causes people to get so close to these deadlines just to extend the uncertainty.”
She added that it doesn’t have the effect people think it does.
Federal student loan holders haven’t had to make payments since March 2020, when then-President Donald Trump signed into law the CARES Act, which paused payments through September 2020 and froze interest accumulation for the roughly 42 million borrowers.
Trump later took executive action to extend the deferral period through January 2021. Biden, on his first day in office, signed an executive order continuing the pause through Sept. 30, 2021. He issued another extension in September, giving borrowers until Jan. 31 before they would have to resume making payments. At the time, Biden said it would be the final extension. He reversed course when the omicron variant hit the U.S., issuing an extension in December through May 1.
The moratorium doesn’t apply to borrowers with privately held loans.
Progressives have urged Biden to go beyond the payment pause and use his executive authority to cancel up to $50,000 in student debt, but Biden has expressed significant reservations about his legal ability to do so.
Senate Majority Leader Chuck Schumer, D-N.Y., echoed the call for more action during his weekly press conference Tuesday. He said it’s a “good thing” that Biden is extending the moratorium, however that it’s not sufficient.
“I believe the president should go further and forgive $50,000 in student loans permanently. It’s a huge burden on so many people,” Schumer said.
The White House said last spring that the Education Department was conducting a review on Biden’s authority to cancel student debt through executive action and that the president would base his policy decisions in part on the memo’s findings.
The Biden administration for months declined to provide an update on the status of the memo. But in response to a Freedom of Information Act request filed by an advocacy group, the Education Department last year was compelled to release a heavily redacted memo dated April 2021 on the executive branch’s legal power to cancel student debt.
The White House has repeatedly declined to make public an unredacted version of the memo.
White House chief of staff Ron Klain said in a March interview with the podcast “Pod Save America” that the administration would grapple with how to address more widespread debt forgiveness when the payment moratorium eventually expires.
“Joe Biden right now is the only president in history where no one has paid their student loans for the entirety of his presidency,” Klain said. “The question of whether or not there’s some executive action [on] student debt forgiveness when the payments resume is a decision we’re going to take before the payments resume.”
Biden has said he would support signing legislation that eliminates $10,000 in student debt, but the issue does not appear to have any momentum on Capitol Hill. Biden has also indicated that he thinks forgiving $50,000 in debt is too generous and would primarily benefit people with expensive private college degrees.
The Federal Reserve estimated that in the fourth quarter of 2021, Americans owed more than $1.7 trillion in student loans. Studies show that students of color are more likely to take on student debt and struggle disproportionately to pay it back. The highest default rates are among students who attended for-profit institutions.
Dareh Gregorian and Sahil Kapur contributed.