The Biden administration announced Tuesday that it will again extend a pandemic-era pause on payments for federal student loans as courts weigh the fate of its debt forgiveness program.
But Education Secretary Miguel Cardona said the department will extend the pause again until the courts reinstate Biden’s debt relief program or resolve ongoing lawsuits.
Key details on Biden’s student loan forgiveness
- The Biden administration will extend a pause on student loan payments as legal fights have put the debt relief plan in limbo.
- Confused about the status of student loan forgiveness? Here’s what we know.
- Want to calculate your eligibility? See how much of your loan debt can be forgiven.
- In October, a federal appeals court blocked the imminent cancellation of federal student loans.
- President Biden’s plan will cancel some of the federal student debt held by millions of Americans.
- Borrowers can qualify for up to $10,000 in student loan forgiveness, and recipients of Pell Grants are eligible for an additional $10,000 in forgiveness.
Payments will resume 60 days after the department is allowed to implement the program or the litigation is resolved, officials said. If that hasn’t happened by June 30, payments will resume 60 days later or on Sept. 1, the department said.
“Callous efforts to block student debt relief in the courts have caused tremendous financial uncertainty,” Cardona said in a statement Tuesday. “We’re extending the payment pause because it would be deeply unfair to ask borrowers to pay a debt that they wouldn’t have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests.”
The extension arrives as Biden is fighting multiple lawsuits seeking to overturn one of his signature economic policies.
The Biden administration last week asked the Supreme Court to reinstate its plan to cancel up to $20,000 in federal student loan debt for more than 40 million borrowers. The U.S. Court of Appeals for the 8th Circuit had granted the request of a coalition of six Republican-led states to impose an injunction on the plan amid ongoing litigation.
In a separate case, a federal judge in Texas on Nov. 10 declared the forgiveness plan unlawful. The Justice Department has asked the U.S. Court of Appeals for the 5th Circuit to put a hold on that ruling while the court considers the merits of the administration’s appeal. Administration lawyers asked the court for a final ruling by Dec. 1.
The legal battles have left millions of student loan borrowers in the lurch. More than half of the eligible people had applied for Biden’s loan forgiveness program before it was ground to a halt, with the Education Department approving some 16 million applications. Despite the hold on the program, the department over the weekend notified people that their applications were approved, assuring them the administration will discharge the debt if it prevails in court.
Civil rights groups and anti-debt activists have been urging Biden to refrain from restarting loan payments while the debt relief program hangs in the balance. White House press secretary Karine Jean-Pierre told reporters on Monday that the administration was examining all options.
“In the face of extreme greed and hypocrisy by the far-right, President Biden today is standing up for all Americans — middle-class and low-income families — who carry the heavy burden of student loan debt,” NAACP President Derrick Johnson said in a statement Tuesday. “The impact this extension will have in the lives of those who have been targeted by predatory student loans cannot be overstated.”
The extension means borrowers with student loans held by the Education Department will continue to see payments suspended without penalty or accrual of interest for the duration of the moratorium. Collections on defaulted loans will still be halted, and any borrower with defaulted federal loans whose wages are being garnished will receive a refund.
The moratorium was first instituted in 2020 because of the economic upheaval caused by the pandemic and was extended twice by the Trump administration and now six times by Biden’s White House.
“Borrowers are drowning under student loan debt and the Biden administration is throwing them a lifeline as we fight MAGA Republicans in court,” Senate Majority Leader Charles E. Schumer (D-N.Y.) said in a statement. “The pause in payments and interest gives student loan borrowers more opportunity to pay down their debt and reach important milestones in life like opening a savings account, purchasing a home, and saving for retirement.”
The Committee for a Responsible Federal Budget, a D.C.-based think tank, estimates that extending the pause for 60 days beyond June 30 would cost $40 billion, or $5 million each month in lost revenue from interest. That would bring the total cost of the student debt pause to $195 billion, according to the group.
“This is not the kind of policy taxpayers ordered, but it’s all that’s on the menu for the Biden administration,” said Rep. Virginia Foxx (N.C.), the top Republican on the House Education Committee. “We need sane, fiscally responsible policies — not the haphazard decisions being served up by this White House.”
Student loan forgiveness
The latest: The Supreme Court will review the legality of President Biden’s debt relief plan, after another appeals court rejected a bid to revive it. To date, Biden’s student loan forgiveness plan is on ice after a Texas judge blocked the student debt relief plan.
Calculate your eligibility: We tackled everything you need to know about the debt relief plan. Use this calculator to see how much of your student loan debt can be forgiven. Here’s what to expect in the student loan forgiveness application.
The opponents: What is happening to student loan forgiveness? A federal appeals court temporarily halted the student debt relief program. Six Republican-led states are also suing to overturn President Biden’s student loan forgiveness plan. An Indiana lawsuit was the first significant legal action seeking to invalidate Biden’s policy.