Biden Likely To Extend The Student Loan Payment Pause — Here’s Why

Millions of federal student loan borrowers have not had to pay their student loans for over two years. But the payment pause is set to end on May 1, which is in just 26 days. There are increasing signs that Biden is likely to extend the student loan payment pause again, although so far, there is nothing official. Here’s where things stand.

Student Loan Payment Pause Expires in 26 days

The CARES Act, which Congress enacted in March 2020 in response to the Covid-19 pandemic, is responsible for the long-running pause on most student loan payments (specifically for government-held federal student loans). The CARES Act’s student loan relief provisions also suspended accrual interest and halted all collections efforts against borrowers in default on federal student loans.

Congress envisioned six months of relief when it passed the CARES Act. But as the Covid-19 pandemic and the associated economic fallout wore on, the relief was extended several times. President Trump issued several extensions, and President Biden then followed suit. Biden’s most recent extension is set to end in only a few weeks.

Lack of Loan Servicer Communications on Repayment Is Clear Sign That Extension of the Student Loan Payment Pause is Likely

Under the CARES Act, the Department of Education is required to communicate with borrowers on at least six separate occasions about the resumption of repayment, before payments actually begin again. As first reported by Politico last month, the Department of Education quietly instructed its contracted loan servicers to stop sending out notices to borrowers about repayment resuming.

Meanwhile, the Department itself — unlike last year when an earlier extension was set to end — has also not been telling borrowers that repayment is imminently set to restart. Congressional Democratic aides have suggested that this is a signal by the Biden administration that repayment is not in fact going to resume this May.

As first reported by Politico on Tuesday, the Biden administration appears to be eyeing an extension to August 31.

Pressure Campaign to Convince Biden to Extend the Payment Pause is Intensifying

Student loan borrower activists, advocates, and allies have been dramatically increasing the pressure on Biden to act. Last month, a broad coalition of over 200 civil rights, labor, and consumer protection organizations sent a letter to Biden urging him to extend the payment pause, citing inflation and ongoing economic uncertainty. This week, hundreds of student loan borrower activists descended on Washington, DC and held a protest and march, urging Biden to extend the payment pause and cancel student loan debt through executive action.

Meanwhile, top Democrats in Congress have been ramping up the pressure on Biden to extend the payment pause, as well. This includes Senate Majority Leader Chuck Schumer (D-NY), Senator Patty Murray (D-WA) who holds a key position as Chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, and House Majority Whip James Clyburn (D-SC), a key Biden ally. Biden needs Congressional allies to try to pass his agenda this year.

Midterm Elections May Matter For Borrowers Who Want an Extension and Student Loan Forgiveness

The Biden administration may also be taking into account political considerations in light of the midterm elections this November. Restarting payments shortly before those elections could cause problems for Democrats, who hold only narrow majorities in both the House and Senate.

In a poll released last month by the Student Borrower Protection Center (SBPC), a clear majority of surveyed borrowers supported extending the student loan payment pause to at least the end of the year. And another poll released last week showed wide support for across-the-board student loan forgiveness, and suggested that likely voters may be motivated to vote by actions to provide student loan relief.

Big Changes To Student Loan Repayment and Forgiveness Programs May Still Be A Year Away

Throughout the past six months, the Biden administration has been engaged in negotiated rulemaking, which is a process to overhaul key federal student loan programs. The administration has been particularly focused on student loan forgiveness programs such as Public Service Loan Forgiveness, and has proposed creating a new income-driven repayment plan, as well.

But overhauling such programs through new regulations takes a long time. And the final changes are still being hashed out, and would not be effective until the summer of 2023 in most cases. An extension of the payment pause would give the Biden administration time to finalize these programmatic changes so that borrowers have better options when repayment actually resumes. And in fact, Senator Murray suggested just such an approach last month: extend the payment pause to allow the administration to complete its overhaul of key federal student loan programs.

So what will the Biden administration do? “Clearly a decision will need to be made” on extending the payment pause and providing other student loan relief, said top White House officials last week. While clear signs point to an extension, borrowers continue to wait for something official.

Further Student Loan Reading

Student Loan Relief: Advocates Ramp Up Pressure On Biden To Extend Payment Pause, Cancel Student Debt

Student Loan Forgiveness: Top Lawmakers Urge Biden To Cancel ‘Meaningful’ Amount Of Debt And Extend Payment Pause As Polls Show Support

4 Options For Biden To Legally Enact Student Loan Forgiveness Without Congress

Who Qualifies For $6 Billion In Student Loan Forgiveness Announced By Biden Administration