Loan interest

White House to extend student loan moratorium again

Biden administration officials had signaled in recent weeks that they would likely extend the relief, telling federal student loans services to suspend sending notices to borrowers that their monthly payments would begin. The US official named Susan Rice, the president’s domestic policy adviser, as a key part of the negotiations securing the extension.

“Since the administration began, she has advocated for every pause on student loan repayments, including this most recent one,” the official said.

A series of Democrats had urged the Biden administration to extend the payments pause until at least the end of 2022, which would be long enough to avoid forcing borrowers to make payments just before the midterm elections. . Just last week, nearly 100 lawmakers led by Sen. Elizabeth Warren (D-Mass.) and Majority Leader Chuck Schumer sent a letter to Biden asking him to extend the recess “until at least the end of the year “.

The Democratic chairs of the congressional education committees — Sen. Patty Murray (D-Wash.) and Rep. Bobby Scott (D-Va.) — had also urged the administration to extend the relief through 2023.

“Tens of millions of people in debt are once again in limbo as Washington plays politics with the financial lives of borrowers,” said Mike Pierce, executive director of the Student Borrower Protection Center. “Joe Biden must deliver on his promises to fix the broken student loan system and cancel student debt. As voters head to the polls in November, they won’t settle for anything less.

Many progressives want the payment pause extended as a precursor to large-scale debt cancellation that they want the White House to pursue with executive action. But other more centrist Democrats in Congress, some of whom are being reelected this year, had also called on the Biden administration to at least extend the moratorium until next year.

Some Biden advisers have been reluctant to pursue relief because they believe it undermines the administration’s message about the strength of the economic recovery, although last month White House Chief of Staff Ron Klain signaled that the White House would again extend the freeze.

The White House did not immediately respond to requests for comment.

Democrats and student loan advocates have said additional relief is needed as Americans face higher costs due to rising inflation weighing on the economy. But some economists have argued that the extension itself could worsen the inflation crisis. The New York Fed warned in a report last month that it expected to see a “significant increase in delinquencies” on student loans when federal relief expires.

Monthly payments and interest have been suspended on most federal student loans since March 2020, when Congress passed the CARES Act. The Trump administration and the Biden administration then used executive action to further expand that relief.

Republicans have urged the Biden administration to restart student loan payments amid concerns about the rising cost to taxpayers. The various extensions of the suspension of payments have cost more than 100 billion dollars, according to estimates by the Ministry of Education.

The Biden administration estimates that borrowers collectively save about $5 billion each month in interest that does not accrue on their loans.

Some private student lenders whose business has been hurt by pandemic relief have pressured the Biden administration to end the program and restart federal student loan payments for many borrowers. They called for a partial extension of pandemic relief that only targets struggling borrowers.