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As the expiration of an 18-month pause on federal student loan payments approaches, pressure is building on the Biden administration to order an extension and enact broad student loan forgiveness.
The CARES Act, which Congress passed in March 2020 in response to the pandemic, temporarily paused all payments on government-held federal student loans, suspended interest, and stopped all collections initiatives. The student loan freeze has been extended several times. The current extension is set to expire on September 30, 2021 — meaning that millions of student loan borrowers will be resuming repayment in October.
Activists and advocates for student loan borrowers have expressed growing concern about the ability of millions of student loan borrowers to abruptly resume repayment this fall, as well as whether student loan servicers will be able to handle millions of borrower accounts simultaneously resuming repayment — an unprecedented situation.
A diverse coalition of 125 national labor unions, consumer rights organizations, and civil rights groups submitted a letter to President Biden this week, urging him to extend the moratorium and enact broad student debt cancellation.
“The student loan payment pause has been one of the most important investments the federal government has made in Americans’ financial lives in a generation — a recognition that the inadequacies of the existing student loan safety net could not protect families in the midst of an economic and public health crisis,” wrote the organizations. “There is a broad consensus among borrowers, advocates, industry, regulators, enforcement officials, and lawmakers that a rush to resume student loan payments is a recipe for disaster and will result in widespread confusion and distress for student loan borrowers. Before resuming payments on student loans, the Department of Education must undertake significant structural reforms, provide real, immediate relief, and cancel a significant amount of federal student debt. This will ensure that millions of borrowers don’t remain trapped in a broken system just as the economy begins to recover. For the reasons outlined above, we strongly urge you to take immediate action to extend the current pause on student loan payments.”
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Elected officials are also adding to the pressure campaign. “The pause on student loan payments has been a huge relief for families, but it ends in 100 days,” said Senator Warren in a Tweet on Wednesday. Warren and other progressive Democrats wrote a letter to President Biden this week “urging President Biden to extend it at least another 6 months to give [the U.S. Department of Education] more time to prepare, and borrowers and our economy more time to recover.” Warren also called on Biden to cancel student debt.
Polling suggests that the vast majority of student loan borrowers support an extension of the moratorium. A survey conducted by Student Debt Crisis and Savi found that 9 in 10 student loan borrowers are not ready to resume payments again on October 1st, and nearly two-thirds of respondents do not believe they would be ready to resume payments until September 2022 or beyond.
“Our [survey] proves that pandemic relief for student loan borrowers remains critical to the wellbeing of millions of families,” said Natalia Abrams, executive director of Student Debt Crisis. “Even with an economic recovery picking up steam, many Americans still shoulder the economic harm caused by the pandemic. A large majority of respondents say they are not ready to resume student loan payments in October when relief is set to end. We urge the Biden Administration to extend the pause on payments and interest for federal student loans to give Americans a chance to land on their feet as the health crisis subsides and the economic recovery grows.”
Secretary of Education Miguel Cardona acknowledged this week the growing pressure to extend the student loan pause. But he made no commitments about a further extension. “We recognize the impact that the pandemic had on our borrowers. And extending the pause is something that we have had conversations about…. We do plan on having information soon to communicate. Restarting right now, it’s at September 30.”
The Biden administration has also still not announced the conclusion of an ongoing review to determine whether the President has the legal authority to cancel student loan debt unilaterally through executive action. Biden has in the past expressed support for broad student loan forgiveness, but he has been skeptical that it could be enacted using executive authority.
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