Examining Biden’s move on student loans
President Biden’s extension of a pause on federal student loan payments means millions of borrowers will start paying back what they owe just two months before the November midterm elections.
Biden moved the deadline from May until the end of August after sustained pressure from Democrats and outside advocates to keep the freeze going during a time of income uncertainty for many Americans amid the pandemic.
The president said the latest extension is “to enable Americans to continue to get back on their feet after two of the hardest years this nation has ever faced” and to allow them to achieve “greater financial security.”
Here are five questions about Biden’s latest student loan pause:
1. How long will it last?
Some Democrats, led by Sen. Patty Murray (D-Wash.), called on Biden to push the payment pause until 2023, which would put off repayments until after the November midterms. But Biden’s move pushes repayments to just over two months before the election, which some warned could spell political trouble.
2. What loans are covered?
In each freeze, the Department of Education (DOE) directed loan servicers to grant forbearance to federal loan borrowers without accruing interest. The pause has applied to student loans held by federal government agencies, which doesn’t include private student loans.
3. Will it be extended again?
Biden appeared to imply that this will be the last extension, saying it allowed for additional time to assist borrowers as the country continues to recover. White House press secretary Jen Psaki, however, hedged a bit, saying the administration will make an evaluation on a “range of factors as we get closer to that timeline” when asked if borrowers should expect to pay after August.
4. What’s the latest on forgiveness?
The White House said that Biden has not dismissed a possible executive-level cancellation on student debt, after the president campaigned on forgiving at least $10,000 per person during the 2020 presidential campaign.
5. When will we know more?
DOE outlined its plans to be in contact with borrowers before the loan repayments restart, signaling traction in that direction for the first time in over two years. Officials said that during the upcoming five-month period, it will work to prepare borrowers and offer some help to restart their payments in “good standing.”