The Department of Education will soon announce the extension of the freeze, according to a report from CNN. The first payments will be due two months after June 30, unless the Supreme Court greenlights the administration’s debt forgiveness program beforehand. A similar report from Bloomberg quoted multiple unnamed sources.
Former President Donald Trump introduced the pause on federal student loan repayment in March 2020 as a relief measure during the lockdown-induced recession. Trump and Biden had previously extended the pause for a total of seven times, implying that the upcoming freeze will mark the eighth such move, according to a report from Forbes.
The previous extension of the pause on federal student loan payments was slated to expire on December 31. A number of reports had predicted that the White House would once again extend the freeze, which comes at a price tag of $5 billion per month, according to an analysis from the Committee for a Responsible Federal Budget. Extending the pause through the end of 2024 would cost as much as $120 billion, bringing the total cost of the pauses to $275 billion.
Two months ago, however, Biden asserted during an interview that the “pandemic is over,” catching many federal health officials by surprise. “If you notice, no one’s wearing masks,” the commander-in-chief said. “Everybody seems to be in pretty good shape. And so I think it’s changing. And I think this is a perfect example of it.”
The student debt cancellation policy, which would eliminate $10,000 in student debt for borrowers earning less than $125,000 per year and $20,000 for borrowers who used Pell Grants, is currently moving through the court system. The program is now on hold after a ruling from the Court of Appeals for the Eighth Circuit, which granted standing to a lawsuit from multiple Republican state attorneys general who contended that the White House illegally bypassed Congress while drafting the policy.
Solicitor General Elizabeth Prelogar asked the Supreme Court last week to rule on whether student debt cancellation can continue. “The Eighth Circuit’s erroneous injunction leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations,” she wrote.
The Department of Education has nevertheless started informing borrowers that they have been approved for debt cancellation. Some applicants received an email from Education Secretary Miguel Cardona saying they were “eligible for loan relief” after a review of their submission. “We have sent this approval on to your loan servicer,” the message said. “You do not need to take any further action.”
The student loan cancellation policy garnered controversy even among allies of the White House. Multiple swing-state Democratic candidates distanced themselves from the move during the recent midterm elections, while Lawrence Summers, an economist who served under the Obama and Clinton administrations, said that the policy “consumes resources that could be better used helping those who did not, for whatever reason, have the chance to attend college.”