Americans will have another five-month reprieve from federal student loan payments, President Joe Biden announced Wednesday.
This is the sixth time that the government has paused payments on federally held student loans since the coronavirus pandemic began. After a two-year break, borrowers were expecting to have to start repayment on May 1, but payments will now be frozen through at least Aug. 31. Biden said he made the decision to extend the pause due to the pandemic and the still-recovering economy.
Today, my Administration is extending the pause on federal student loan repayments through August 31st, 2022.
Biden’s decision means that student loan payments are now set to resume on Sept. 1, just two months before the midterm elections. Nearly 100 Democrats had sent Biden a letter in late March asking him to freeze payments through at least the end of the year.
The administration also said Wednesday that borrowers who have defaulted on student loans that are currently paused would have that default status removed from their credit history to give them a “fresh start” when they reenter repayment. That move will prevent borrowers who were in default from facing further wage garnishment or other collections when loan payments resume, an Education Department spokesperson confirmed.
Biden did not take any broader steps to cancel student debt, despite pleas from members of his own party and his own campaign promise to cancel at least $10,000 in federal student debt per borrower. Ahead of Wednesday’s announcement, congressional Democrats from progressives like Rep. Pramila Jayapal and Sen. Elizabeth Warren to committee chair Sen. Bob Menendez and Senate Majority Leader Chuck Schumer were all publicly calling on Biden to cancel student debt.
Rep. Alexandria Ocasio-Cortez criticized Biden’s decision to extend the freeze again rather than canceling student debt. “I think some folks read these extensions as savvy politics, but I don’t think those folks understand the panic and disorder it causes people to get so close to these deadlines just to extend the uncertainty,” she tweeted Tuesday.
A coalition of eight other leading Democrats on the issue, including Warren, Schumer, and Jayapal commended Biden’s move in their own joint statement, calling the extension “welcome.” But, they added, that the new September deadline “underscores the importance of swift executive action on meaningful student debt cancellation.”
Asked in March about Democratic calls for Biden to cancel student debt, a White House spokesperson highlighted the president’s past student loan repayment freezes. “The President supports Congress providing $10,000 in debt relief. And he continues to look into what debt relief actions can be taken administratively,” the spokesperson said. “But all borrowers should do their part: take full advantage of the Department of Education’s resources, consider income-based repayment plans to lower payments or public service loan forgiveness, and get vaccinated and boosted.”
While Biden has repeatedly put the onus on Congress to pass legislation to cancel $10,000 in student debt per borrower, his administration already canceled more than $17 billion in student loans on its own, according to the Department of Education, including for borrowers who were misled by for-profit colleges. Last month, Biden’s administration announced that its earlier changes to the Public Service Loan Forgiveness program would result in about 100,000 borrowers having their loans canceled, bringing the total number of borrowers whose loans were forgiven under Biden to 700,000.
Student loan debt in the US totals nearly $1.8 trillion, the vast majority of which is federal. As the cost of college has skyrocketed in the last four decades, wages for young people have not kept up. Nearly 44 million people have federal student debt, according to the Education Data Initiative, and the burden of federal debt lies disproportionately on Black Americans — they are more likely to get federal loans and Black graduates owe an average of $25,000 more in student debt than white graduates.
While many Democrats support some form of student loan cancellation, Congress hasn’t made any significant moves on the issue since Biden took office. The Senate is divided evenly by party, and Democratic Sens. Joe Manchin and Kyrsten Sinema oppose changing Senate rules that would allow their party to pass major legislation with a simple majority.
That’s why Schumer and other Democrats have pushed Biden to go on his own.
Republicans initially backed freezing federal student loan payments at the height of the coronavirus pandemic, but the party has opposed Biden’s latest extensions. Last summer, the top Republicans on the House and Senate Education Committees wrote a letter to Education Secretary Miguel Cardona saying that as more Americans got vaccinated another extension of the freeze would be “unnecessary” and too costly for taxpayers.