The White House may extend its suspension of federal student loan repayments.
In March 2020, the CARES Act temporarily paused student debt repayments and pegged the federal student loan interest rate at 0% — a policy extended by both President Donald Trump and President Joe Biden. Last week, however, White House Press Secretary Jen Psaki confirmed that “a smooth transition back into repayment is a high priority for the administration” — indicating that an extension of the pause beyond January 2022 could not be expected.
Nevertheless, a Tuesday statement from a Department of Education spokesperson indicated that the White House may once again delay student loan repayments.
“Since day one of the Biden Administration, we’ve been hard at work delivering meaningful relief to student loan borrowers,” the spokesperson told CNBC. “That started with an extension of the pause on federal student loan repayment until Jan. 31, 2022. Later this week, we will be announcing whether to extend the pause further.”
Any potential move toward student loan forgiveness would align with recent pressure from progressives, who have been urging Biden to suspend repayments — and cancel student debt altogether.
A group of more than 200 progressive organizations — such as the American Association of University Professors, the American Civil Liberties Union, the American Federation of Teachers, the American Psychological Association, Fossil Fuel Divest Harvard, and the NAACP — wrote to Biden earlier this month:
You ran for president on the promise that you would reform the student loan system to ensure that student loan payments would be affordable for all. Your administration’s decision to extend the payment pause, alongside the Department’s recent overhaul of the programs for Public Service Loan Forgiveness and Total and Permanent Disability Discharge are critical and welcome first steps. Right now, your administration has the opportunity to continue repairing the damage caused by policy failures at the federal and state level and decades of government mismanagement and industry abuses — an opportunity and an obligation that must be fulfilled before any action is taken to resume monthly student loan payments.
It is critical that your administration continue to deliver on your promises made to student loan borrowers and their families before ending the pause in payments and collections. Borrowers need immediate relief from the crushing burdens of massive student loan debt as the pandemic exacerbates financial strain for all Americans and throws existing racial disparities in wealth and educational attainment into especially stark relief.
During a floor speech earlier this month, Rep. Alexandria Ocasio-Cortez (D-NY) likewise denounced the Biden administration’s refusal to “cancel” student debt.
“It’s teenagers signing up for what is often hundreds of thousands of dollars of debt. We just do that. Our government allows that,” Ocasio-Cortez argued. “We give 17-year-olds the ability to sign on and sign up for $100,000 worth of debt and we think that’s responsible policy.”
“I’m greatly looking forward to the Biden administration canceling student loan debt and no longer advancing the false narratives that student loan debt is for the privileged,” she added. “What a ridiculous assertion. Do we really think that a billionaire’s child is taking student loans?”
In quarter two of 2021, the Federal Reserve estimated that Americans owe $1.73 trillion in student loans.