Dozens of congressional Democrats are urging President Joe Biden to extend the pause on federal student loan payments at least until the end of the year — and, ultimately, to cancel “a meaningful amount” of student loan debt altogether.
More than 90 lawmakers in total made their case Thursday to the president in a letter, which included signatures from Sens. Elizabeth Warren, D-Mass., and Chuck Schumer, D-N.Y., as well as many progressive House members of "The Squad.” Reps. Jamaal Bowman, D-N.Y., Ilhan Omar, D-Minn., and Ayanna Pressley, D-Mass., added their names, though Rep. Alexandria Ocasio-Cortez, D-N.Y., did not.
The student loan moratorium is slated to expire May 1. In effect since March 2020, the moratorium paused the collection of monthly federal student loan payments and lowered the interest rate on those loans to zero in light of the COVID-19 crisis.
The Democratic lawmakers now argue that the policy provides critical relief to millions of families, saving them an average of $393 per month. They noted that more than 9 in 10 borrowers are worried about being able to afford their payments if they restart as planned next month, due to inflation and other economic factors.
Former President Donald Trump first approved the moratorium at the onset of the pandemic. But after being extended five times — two times by Trump and three by Biden — many Republicans feel the moratorium has gone on long enough.
In March, Reps. Jim Banks, R-Ind., and Bob Good, R-Va., introduced legislation that seeks to “prevent further abuse” by the Education Department regarding any more extensions. Though the moratorium only applied automatically to borrowers with "Direct" student loans from the federal government, those loans account for the vast majority of the $1.7 trillion student debt total.
“Republicans need to use their oversight power to ensure that this administration stops using COVID as a never-ending excuse to expand its power, waste taxpayer dollars and further fuel inflation,” Banks told Politico.
Politics aside, it's clear that resuming payments could have steep consequences for borrowers. A recent study from the Federal Reserve Bank of New York found that when or if student loan payments resume, federal Direct loan borrowers will be at an increased risk of falling behind on all of their debt payments — not just student loans.
“We believe that Direct borrowers are likely to experience a meaningful rise in delinquencies, both for student loans and for other debt, once forbearance ends,” the researchers wrote.
In addition, they found that federal loan borrowers typically have lower credit scores and higher remaining student loan debt than their private loan-borrowing counterparts.
Thus far, the researchers said the student loan moratorium has waived $195 billion worth of payments.
Will Biden extend the student loan payment pause again?
With the expiration of the moratorium bearing down on millions of student loan borrowers, Biden is facing increased pressure from Democrats to act. He does have the executive power to extend the moratorium — and possibly even cancel federal student loan debt entirely — without the need for legislation.
While the latter is unlikely, there are signs the Biden administration may lengthen the student loan payment pause a sixth time.
In March, several news outlets reported that the Department of Education told federal student loan servicers to not send out notices to borrowers that payments were resuming in May. This could signal that payments are, in fact, not resuming in May.
White House Chief of Staff Ron Klain’s recent comments have also added to the rumors around an extension.
“The President is going to look at what we should do on student debt before the pause expires, or he'll extend the pause,” Klain said in a recent interview with Pod Save America, a left-leaning podcast. “Joe Biden right now is the only president in history where no one’s paid on their student loans for the entirety of his presidency.”
Technically speaking, millions of borrowers have continued to pay down their student loans during Biden’s presidency, as the automatic forbearance is only in place for federal Direct loan borrowers. And even among those borrowers, nearly 20% have kept making payments when they weren’t required to.
Nothing is confirmed yet, but Klain’s remarks could suggest the Biden administration is seriously considering another, possibly permanent, reprieve for borrowers.