Biden Extends Payment Pause on Student Loans Through August

Biden Extends Payment Pause on Student Loans Through August

The freeze on student loan repayments were set to expire on May 1. President Joe Biden announced a sixth extension of the loans.

President Joe Biden has not fulfilled his campaign promise of canceling $10,000 of federal student loans per borrower, but he has again extended the student loan payment pause through August 31.

The freeze on the repayments, which has been in place since the start of the two-year-long coronavirus pandemic, was slated to expire on May 1. This is the sixth extension of the repayment pause that has saved nearly $200 billion for borrowers, according to the Federal Reserve.

In a White House-released statement, Biden said that the economy is stronger compared to a year ago but that “we are still recovering from the pandemic and the unprecedented economic disruption it caused.”

Biden said the extension will help borrowers who may be facing payments amid other financial challenges.

“That additional time will assist borrowers in achieving greater financial security and support the Department of Education’s efforts to continue improving student loan programs. As part of this transition, the Department of Education will offer additional flexibilities and support for all borrowers,” he said. “I’m asking all student loan borrowers to work with the Department of Education to prepare for a return to repayment, look into Public Service Loan Forgiveness, and explore other options to lower their payments.”

According to CNBC, nearly all borrowers eligible for the repayment pause have taken advantage of it, according to an analysis by higher education expert Mark Kantrowitz. Just 1 percent of them have continued to pay off the loans.

‘Government Keeps Changing Its Mind’

Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers, told CNBC that the repeated extensions of the payment pause will likely cause its own set of issues.

“What’s a borrower to believe or plan for anymore when the government keeps changing its mind?” he said. “When the inevitable resumption does finally happen, millions of borrowers will likely miss it and go delinquent because of the false expectations the government is now setting.”

Full Forgiveness on the Table?

Biden is still under pressure to forgive all student loan debt. According to a Student Borrower Protection Center and Data for Progress poll, nearly 66 percent of likely voters are in support of the president forgiving student loan debt, with more than 70 percent of Latino and Black voters in favor.

According to CNN, “some key Democratic lawmakers, including Senate Majority Leader Chuck Schumer of New York and Sen. Elizabeth Warren of Massachusetts, have been pressuring Biden to broadly cancel up to $50,000 of student loan debt per borrower.”

Biden, though, hasn’t committed to going higher than $10,000 per borrower and continues to resist pressure to cancel debt on his own via an executive order.

Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters.