Student Loan Payments: Will Joe Biden Extend the Pause?

Student Loan Payments: Will Joe Biden Extend the Pause?

On his fist day in workplace, President Joe Biden signed an government order extending a freeze on federal student loan repayments for eight months. The extension adopted the preliminary freeze that was included within the Trump administration’s CARES Act handed in March 2020, which froze funds for a interval of six months. Prior to Biden’s government order, the freeze was prolonged once more by Trump by means of December 2020. Biden’s extension delayed the beginning of repayments till not less than October 2021.

Recently, feedback by Biden’s Secretary of Education Miguel Cardona have raised the opportunity of an additional extension of the delay in federal student loan repayments. While talking at a convention for the Education Writers Association, Cardona was requested if the administration deliberate to increase the freeze on student loan repayments, to which he responded that the administration was “looking at it.” Cardona went on to say that the administration’s determination could be information pushed and could be based mostly on the nation’s progress in general pandemic restoration. Regardless of the choice, Cardona additionally indicated {that a} “ramp-up” interval could be carried out at no matter level student loan repayments do start once more, in an effort to be sure that the method was “as smooth as possible,” for debtors.

In addition to the pause on federal student loan repayments, the Biden administration has additionally canceled loans for 72,000 defrauded debtors and 41,000 debtors with disabilities, whereas additionally extending the freeze to incorporate these with privately held loans.

According to the Department of Education, the collective actions taken on student loan repayments have saved student loan debtors practically $5 billion monthly by not having to make curiosity funds. A separate report, nonetheless, discovered that the common quantity saved by particular person debtors was solely simply over $2,000.

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In addition to motion taken on student loan repayments, the Biden administration’s proposed American Families Plan would see $109 billion put in direction of making neighborhood faculty free, together with growing Pell Grant awards and investing in common preschool.

What About Cancelling Student Debt?

There is not any direct connection between a possible extension of the freeze on federal student loan repayments and the opportunity of student debt cancelation. According to White House Chief of Staff Ron Klain, President Biden has tasked Secretary Cardona with drafting a memo concerning the president’s “legal authority” to forgive student loans and to cancel as much as $50,000. Biden will then decide about find out how to proceed on the problem based mostly on the contents of the memo.

Progressive voices in Congress have more and more known as for such a transfer. During her presidential marketing campaign, Senator Elizabeth Warren unveiled an enormous student loan forgiveness plan, and he or she and different Democratic legislators have been more and more vocal in regards to the want for a $50,000 student loan forgiveness measure. It continues to be unclear if the president has the authorized authority to enact such a measure.

Eli Fuhrman is a contributing author for The National Interest.

Image: Reuters.