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Education Secretary Miguel Cardona said Sunday that the Biden administration would announce in the next ten days whether or not the nationwide pause on federal student loan payments and interest accrual that went into effect two and half years ago would extend or expire.
During an appearance on NBC’s “Meet the Press,” Cardona told host Chuck Todd that the administration knows “many people are waiting to hear something” about the Aug. 31 deadline on the current moratorium, which began under the Trump administration at the start of the COVID-19 pandemic and has since been extended several times.
“We’ve been talking daily about this, and I can tell you the American people will hear within the next week or so,” Cardona said.
Cardona said the administration had already relieved over $10 billion of student debt for 1.6 million borrowers under the Public Service Loan Forgiveness program, which includes government organizations at any level.
“Public Service Loan Forgiveness was broken,” he said. “We fixed it so that our teachers or nurses can get loan forgiveness right away.”
Cardona said the administration has focused on ensuring it would protect students and borrowers from day one. Since taking on the previous administration’s pause, the Biden administration has forgiven approximately $32 billion in student loans, many of whom attended schools that went bankrupt or faced litigation for misleading students and fraudulently conducting business.
Last week, the U.S. Department of Education announced that it would cancel about $4 billion in the remaining 208,000 federal student loans for borrowers who attended ITT Technical Institute from 2005 until the for-profit college chain dissolved in 2016. Officials also formally notified DeVry University to pay back $24 million of approved borrower defense claims.
Forbes Advisor reports that about 92% of federal loans make up the vast majority of American education debt, totaling $1.6 trillion owed by 43 million borrowers.
In a separate report, the publication said that 2.7 million borrowers had their federal loans in forbearance at the beginning of 2020. By the end of 2021, that number hit nearly 24 million borrowers.
Biden suggested that he consider forgiving $10,000 of student loan debt for most borrowers earlier this year. With the freeze still in place, the administration has faced mounting pressure from advocates for student loan forgiveness and Democrats to cancel up to $50,000 in debt per borrower.
However, canceling federal student loans for millions of Americans struggling to fulfill their end of the deal would end up costing the federal government hundreds of billions of dollars, and the general public would eventually financially suffer the consequences of that decision.
The Committee for a Responsible Federal Budget reports that canceling up to $50,000 of debt per borrower would cost around $950 billion, and canceling up to $10,000 would cost roughly $245 billion.
Tara Miller, a student loan consultant at GradFin, which offers personalized student loan advice, told CNBC she believes the administration would likely continue halting payments based on reports from loan advisers that said borrowers wouldn’t begin repayment as the moratorium’s deadline approaches.
“I do think that they will announce another extension, likely next week,” Miller said.