Biden administration officials had signaled in recent weeks that they would likely extend the relief, telling federal student loan servicers to refrain from sending notices to borrowers that their monthly payments would begin. The US official pointed to Susan Rice, the president’s domestic policy adviser, as key in the negotiations to secure the extension.
“Since the Administration’s inception, she has advocated for every student loan payment pause, including this most recent one,” the official said.
Several Democrats had urged the Biden administration to extend the payment pause to at least the end of 2022, which would be long enough to prevent borrowers from making 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 pause “at least through the end of the year.”
The Democratic chairs of the congressional education committees, Sen. Patty Murray (D-Wash.) and Rep. Bobby Scott (D-Va.), also urged the administration to extend the relief through 2023.
“Tens of millions of people with student debt are once again in limbo as Washington plays politics with the financial lives of borrowers,” said Mike Pierce, executive director of the Center for Student Borrower Protection. “Joe Biden needs to keep his promises to fix the broken student loan system and cancel student debt. When voters go to the polls in November, they won’t settle for less.”
Many progressives want the payment pause extended as a precursor to the large-scale debt cancellation that they want the White House to pursue through executive action. But other more centrist Democrats in Congress, some of whom are running for re-election this year, have also called on the Biden administration to at least extend the moratorium into next year.
Some Biden advisers have been reluctant to continue the relief because they believe it undermines the administration’s message about the strength of the economic recovery, though last month White House chief of staff Ron Klain noted that the White House would extend the freeze again.
The White House did not immediately respond to requests for comment.
Democrats and advocates for student loan borrowers have said more relief is needed as Americans face higher costs as a result of rising inflation battering the economy. But some economists have argued that the extension itself could worsen the inflation crisis. The New York Federal Reserve warned in a report last month that it expected to see a “significant increase in delinquencies” in 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. Both the Trump administration and the Biden administration subsequently used executive action to further extend that relief.
Republicans have been urging the Biden administration to restart student loan payments due to concerns about the rising cost to taxpayers. The various extensions to the payment pause have cost more than $100 billion, according to estimates from the Department of Education.
The Biden administration estimates that borrowers collectively save about $5 billion each month in interest that doesn’t accrue on their loans.
Some private student lenders whose business has been affected by the pandemic relief have been pushing the Biden administration to end the program and restart federal student loan payments for many borrowers. They have called for a partial extension of pandemic relief that is aimed only at borrowers who are struggling.
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