Biden administration set to extend student loan payment pause through August
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The Biden administration plans to announce a further extension of the payment pause for federal student loan borrowers, sources tell CNBC.
The break is expected to last until August. This would be the sixth extension of the break, which now spans two presidencies.
Currently, the pandemic-era relief policy suspending student loan bills is set to expire in May.
Former President Donald Trump first announced the suspension of education bills for millions of Americans in debt in March 2020, when the coronavirus pandemic brought the US economy to its knees and unemployment soared. sharply. According to an analysis by higher education expert Mark Kantrowitz, nearly all borrowers eligible for the break have used it, with only around 1% continuing to pay.
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The Great Resignation is still in full swing
The country has emerged from the darkest days of the pandemic and the unemployment rate has come down. Still, the Biden administration has expressed reluctance to resume payments before making its decision on student loan forgiveness.
“The president is going to look at what we should do on student debt before the pause expires, or he will extend the pause,” White House Chief of Staff Ron Klain said. noted last month on the “Pod Save America” podcast.
“Joe Biden is currently the only president in history where no one has paid his student loans during his entire presidency,” Klain said.
Democrats and advocates had warned that the resumption of payments after more than two years could have signaled to some that Biden was turning away from his vow to cancel at least $10,000 in student debt for all, leading to damaging headlines and a drop in voter turnout in November. .
Senate Majority Leader Chuck Schumer, DN.Y., and Sen. Elizabeth Warren, D-Mass., are pushing the president to write off closer to $50,000 per borrower.
Nearly 66% of likely voters favor the president’s student debt cancellation, with more than 70% of Latino and black voters in favor, according to a recent poll. found.
Even before the health crisis, student loans were a major challenge for many households. Outstanding education debt exceeds $1.7 trillion, putting more strain on families than car or credit card debt. Some 40 million people in the United States have student loans, and more than a quarter are in default.
Again Scott Buchananexecutive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers, warned that repeated extensions would cause their own problems for the loan system.
“What more can a borrower believe or expect when the government keeps changing its mind?” Buchanan said. “When the inevitable recovery finally happens, millions of borrowers will likely miss it and become delinquent because of the false expectations the government is now setting.”
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