The Biden administration, shifting course on a crucial pocketbook issue for millions of adults, announced Wednesday it will extend a pause on federal student loan payments through May 1 as the omicron variant threatens to hurt the U.S. economy.
“Now, while our jobs recovery is one of the strongest ever — with nearly 6 million jobs added this year, the fewest Americans filing for unemployment in more than 50 years, and overall unemployment at 4.2 percent — we know that millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments,” Biden said in a statement.
“This is an issue Vice President Harris has been closely focused on, and one we both care deeply about. Given these considerations, today my Administration is extending the pause on federal student loan repayments for an additional 90 days — through May 1, 2022 — as we manage the ongoing pandemic and further strengthen our economic recovery.”
Many activists had pushed for the administration to take the step, but the White House initially resisted extending the moratorium.
In August, the Education Department had issued the fourth suspension of federal student loan payments during the coronavirus pandemic. That moratorium had been set to expire on Jan. 31. At the time it was issued, administration officials had said it would be the final such extension offered to borrowers.
Republicans have slammed the administration for granting borrowers such a lengthy grace period. Rep. Virginia Foxx (N.C.), the top Republican on the House Education and Labor Committee, called the August extension “a grave disservice to borrowers across the country” and a “dereliction of duty.” Foxx argued at the time that the administration should have worked with Congress to get repayments started by Oct. 1.
On Wednesday, Foxx reiterated that view. She accused Biden of providing “backdoor loan forgiveness through administrative fiat,” and said the president “is using the permanent pandemic narrative to bankrupt our country and bow to the progressive base at the expense of borrowers and taxpayers.”
But congressional Democrats applauded the White House decision.
“We’re pleased the Biden administration has heeded our call to extend the pause on student loan payments,” Sen. Elizabeth Warren (D-Mass.), Senate Majority Leader Charles E. Schumer (D-N.Y.) and Rep. Ayanna Pressley (D-Mass.) said in a joint statement. The three said that the payment pause “has improved borrowers’ economic security, allowing them to invest in their families, save for emergencies, and pay down other debt. Extending the pause will help millions of Americans make ends meet, especially as we overcome the Omicron variant.”
These lawmakers and others have also pushed Biden for broader executive action to cancel student debt, urging him to forgive up to $50,000 per borrower. Biden has not taken such a sweeping step but has indicated he is open to legislative proposals on debt relief.
The administration said it has also provided nearly $13 billion in targeted relief to more than 640,000 borrowers who meet certain criteria, such as those who have a total and permanent disability.
Wednesday’s action will help 41 million borrowers save $5 billion per month, the administration said. Borrowers with student loans from the Education Department will see payments automatically suspended without penalty or accrual of interest for the duration of the moratorium.
“This is HUGE news!” the Student Debt Crisis Center, an advocacy group, said in a statement. “Extending pandemic relief for student loan borrowers avoids certain disaster for many families.” The group called on activists to push Biden for executive action to cancel student debt.
However, Biden said borrowers must get ready for a return to the normal repayment process. The administration urged borrowers to make sure their contact information is up to date and said they should consider enrolling in electronic debit programs to facilitate payments when the time comes.
“As we are taking this action,” Biden said in his statement, “I’m asking all student loan borrowers to do their part as well: take full advantage of the Department of Education’s resources to help you prepare for payments to resume; look at options to lower your payments through income-based repayment plans; explore public service loan forgiveness; and make sure you are vaccinated and boosted when eligible.”
Danielle Douglas-Gabriel contributed to this report.