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With eviction victory in hand, congressional Democrats turn attention to student loans

Temporary freeze on federal student loan payments expires at the end of September, and many Democrats want it extended

Sen. Elizabeth Warren, D-Mass., heads to the Senate floor for a vote on Capitol Hill on Tuesday, Aug 03, 2021 in Washington, DC. (Jabin Botsford/The Washington Post)

A torrent of Congressional Democrats is calling on the White House to extend a soon-expiring pause on federal student loan payments, emboldened by their success in pressuring the Biden administration to approve a new eviction moratorium.

The current student loan freeze temporarily spares many students from having to make their typical monthly payments and sets their interest rates at zero percent. The policy dates back to the earliest days of the pandemic, but it is set to conclude at the end of September — meaning students could see bills again starting October 1.

Fearing some people with student loan debt still may be in dire financial straits, many liberal-leaning lawmakers in the House and Senate are urging President Biden to continue the deferral period. They point to the arrival of the new, highly transmissible delta variant of the coronavirus, as they make the case for additional protections into next year. Some of these Democrats are also calling for longer-term measures, including the full cancellation of their remaining debts.

Biden administration moves to block evictions in most of U.S. following liberal backlash

“Time is running out on the student-loan payment pause,” Sen. Elizabeth Warren (D-Mass.), who has long advocated for such relief, stressed on Wednesday. “The payment pause gives us a moment to focus on, the same way the eviction moratorium gave us a moment to focus on, what’s happening in this country.”

In recent weeks, the Biden administration has signaled it is at least considering another freeze on federal student loan payments. Without a final decision, however, lawmakers have ramped up their advocacy — hoping to ward off the same financial cliff that had threatened millions of renters until Tuesday.

The Biden administration announced a temporary ban on evictions across most of the country on Aug. 3. (Video: Reuters)

With the eviction moratorium, the White House initially said it lacked the authority to reissue its policy, which expired at the end of July, citing an adverse court decision casting doubt on its constitutionality. The expiration of the eviction ban exposed renters who were behind on their bills to the prospect of losing their homes. But days of public and private pressure from Democrats led by Rep. Cori Bush (D-Mo.) prompted the Biden administration to reverse course, restoring protections for many Americans facing financial hardship.

Speaking with reporters after the decision, members of the Congressional Progressive Caucus, which helped lead the charge, heralded the move by the Biden administration as critical to keeping millions of Americans housed. In doing so, they also stressed students and graduates now need the same sort of help.

Last-minute eviction ban plan fuels confusion for some.

“We’ve been worrying about the fiscal cliff of these moratoria expiring,” said Rep. Pramila Jayapal (D-Wash.), the leader of the caucus, in an interview. She said she raised the issue with the White House as she discussed the fate of the eviction protections with top aides this past weekend.

“Don’t go to the last minute,” Jayapal warned. “These are matters of life and death for people.”

The fight over eviction protections — and the new campaign seeking aid for students — comes at a moment of political ascendance for the Democratic Party’s progressive wing. The new victory this week has left the bloc of lawmakers galvanized, as they try to put their stamp on other national economic debates — including the still-emerging fights over infrastructure investments as well as a $3.5 trillion budget deal that includes health care, immigration and climate-change spending.

The White House declined to comment, and the Department of Education did not respond to a request.

With student loans, the Education Department first allowed borrowers to suspend payments on their federal debts last March under President Donald Trump, seeking to help an estimated 42 million people who found themselves at risk of delinquency. Since then, the U.S. government has issued two extensions, as federal officials tried to balance students’ financial needs with the complexity in restarting collections on a loan portfolio of more than $1.5 trillion.

Pelosi says Biden has no authority to cancel student loans on his own.

Democrats maintain the payment pause has provided a financial lifeline to students in need — while even helping an estimated 2.5 million borrowers repay their debts in full, and perhaps early, as a result of the government’s decision to set interest rates at zero. Warren joined Democratic Sen. Edward J. Markey (Mass.) in citing the statistic last month as they labored to make the case to the Biden administration that it needed to announce another extension of the policy.

“As the economy recovers from this unprecedented crisis, borrowers should not be faced with an administrative and financial catastrophe just as they are beginning to regain their footing,” the senators wrote.

In doing so, the two Democrats also warned that restarting collections as planned in October threatened to result in undue hardship for families. They pointed to evidence obtained earlier this year from major servicers, including Navient, Mohela and EdFinancial, which showed that many borrowers may not even be aware the moratorium is soon expiring. Warren and Markey further said their investigation had revealed little contact between some major lenders and their borrowers about payments, even as recently as this summer, partly due to a lack of guidance from the Education Department about the future of the moratorium.

But their efforts at times have been met with public silence from the Biden administration, prompting lawmakers including Warren, Senate Majority Leader Charles E. Schumer (D-N.Y.) and Rep. Ayanna Pressley (D-Mass.) last week to try to ratchet up the pressure further. Appearing at a news conference, Schumer called it one of the “most effective steps the government has taken” in response to the pandemic. The leader urged the White House to extend the policy at least until next spring, but also encouraged the president to go much further — using his “existing power” to wipe out some of Americans’ debts entirely.

“This pause has actually shown how important canceling student debt is to borrowers and to our economy,” Schumer said. “We’ve heard about how being saddled with this debt has affected millions of Americans’ lives on so many choices they’ve liked to make.”

The issue for months has loomed large over Biden, after a 2020 presidential cycle that saw some Democratic contenders promise to seek the cancellation of some or all of students’ debts. Biden has endorsed efforts to wipe out about $10,000 of students and graduates’ debs, in a break with progressives, who want to see even more erased.

More than 60 House and Senate Democrats urged Biden to cancel student debt in a letter in late June, as they issued their own call to extend the payment moratorium in the meantime. But the president at times has sounded a skeptical note about delivering the sort of relief his party’s lawmakers seek. Six months ago, for example, Biden signaled he is not open to waiving $50,000 in student debt, as lawmakers like Warren have sought.

“I will not make that happen,” Biden told a borrower at a town hall hosted by CNN in Milwaukee on Tuesday. He later said: “I’m prepared to write off a $10,000 debt, but not 50 because I don’t think I have the authority to do it.”

The Justice Department, meanwhile, continues to review the legality of the matter. In recent days, though, House Speaker Nancy Pelosi (D-Calif.) has signaled it is likely up to Congress to act — a tough proposition given Democrats’ narrow majorities in the House and Senate.

Undeterred, some Democrats have resumed pushing vigorously this week. Holding a call Tuesday to celebrate their victory in achieving a new eviction moratorium, progressive lawmakers specifically stressed the importance of helping borrowers in need as their next act. Rep. Ilhan Omar (D-Minn.), for one, called on the White House and Congress alike to pursue “full student debt cancellation.”

“Students loans are the next fight,” said Rep. Barbara Lee (D-Calif.), a member of the caucus, in an interview a day later. “We’ve got to have student loan forgiveness.”

Democrats see reason for optimism in the loan fight, especially after tangling with the White House over evictions. Lawmakers, including Warren, say the law is on the president’s side in canceling student debt.

“The eviction moratorium could have died a quiet death. But it didn’t because people spoke out,” Warren said, adding of her prospects: “That’s what gives me hope.”

Danielle Douglas-Gabriel contributed to this report.