WASHINGTON — The Biden administration Wednesday announced its plans to extend the pause on federal student loan repayments until the end of August.
“I recognized in recently extending the COVID-19 national emergency, we are still recovering from the pandemic and the unprecedented economic disruption it caused,” President Joe Biden said in a statement.
“If loan payments were to resume on schedule in May, analysis of recent data from the Federal Reserve suggests that millions of student loan borrowers would face significant economic hardship, and delinquencies and defaults could threaten Americans’ financial stability.”
The White House will extend the deadline for student borrowers to pause on federal loan repayments, interest and collections until Aug. 31. The announcement also provides a “fresh start” on loan repayments by removing any prior defaults to allow those borrowers to re-enter repayment in good standing.
The current pause would have ended on May 1.
“The Department of Education is committed to ensuring that student loan borrowers have a smooth transition back to repayment,” U.S. Secretary of Education Miguel Cardona said in a statement.
“This additional extension will allow borrowers to gain more financial security as the economy continues to improve and as the nation continues to recover from the COVID-19 pandemic.”
Cristina Tzintzún Ramirez, the president of NextGen America, an organization that mobilizes young voters, released a statement calling the announcement “another short-term fix to a crisis that demands a long-term solution.”
“Young voters feel frustrated with President Biden’s failure to fulfill his promise on student debt cancellation,” Tzintzún Ramirez said. “While borrowers surely appreciate the help paying rent and making ends meet, what they really need is a debt cancellation that will allow them to buy a house and build a future.”
During Biden’s campaign for the presidency, he pledged to cancel student loan debt during a town hall in Miami.
“I’m going to eliminate your student debt if you come from a family (making less) than $125,000 and went to a public university,” he said, according to Black Enterprise.
Biden has since called on Congress to pass legislation to cancel up to $10,000 of student debt, but many congressional Democrats argue that Biden could reduce debt through an executive order. They’ve pushed him to cancel up to $50,000 in student loan debt.
The Federal Reserve estimates that the total U.S. student loan debt is more than $1.75 trillion. The Department of Education owns about 92% of that student loan debt.
Democrats push for debt cancellation
A handful of U.S. Senate and House Democrats released a joint statement that said they welcomed the extension, but stressed the need to cancel student loan debt.
“While the extension is welcome, a looming restart of student loan payments in September underscores the importance of swift executive action on meaningful student debt cancellation,” they wrote. “We continue to implore the President to use his clear legal authority to cancel student debt, which will help narrow the racial wealth gap, boost our economic recovery, and demonstrate that this government is fighting for the people.”
Those lawmakers include Sens. Elizabeth Warren of Massachusetts, Chuck Schumer of New York, Alex Padilla of California and Raphael Warnock of Georgia, as well as Reps. Ayanna Pressley of Massachusetts, Ilhan Omar of Minnesota, Pramila Jayapal of Washington, and James E. Clyburn of South Carolina.
The chair of the House Education and Labor committee, Rep. Bobby Scott, released a statement in which he did not call for the cancellation of student debt, but praised the administration for its decision to continue the pause.
“By extending the pause on student loan repayments, collections, and interest accrual, the Biden-Harris Administration has demonstrated that it remains committed to helping borrowers get back on their feet,” the Virginia Democrat said.