The Biden administration stated on Wednesday that the moratorium on federal student loan payments would be extended until May 1, citing the threat posed by the highly transmissible omicron version of the coronavirus, which has emerged as a new economic hazard.
President Joe Biden issued a statement in which he stated that “millions of student loan borrowers are currently dealing with the effects of the pandemic and require additional time before starting payments.”
It has been months since the White House insisted that Biden would not extend the pause past January 31, and the administration has warned borrowers that they should be prepared to resume payments in February despite an increase in the number of Covid cases and concerns about inflation sweeping across the country.
As the omicron variant spread swiftly, the administration’s tone began to soften, with White House press secretary Jen Psaki telling reporters on Tuesday that Vice President Joe Biden had “not made a decision yet” on whether to grant another extension.
Biden has come under pressure from debt relief supporters and some Democratic senators to extend the moratorium, particularly after Sen.
Joe Manchin, D-West Virginia, stated he would not vote for Biden’s Build Back Better Act, casting doubt on the legislation’s prospects. According to the White House, the plan would alleviate inflation concerns by cutting the costs of items such as prescription medications and child care, among other things.
Natalia Abrams, president of the Student Debt Disaster Center, said in a statement that the Omicron variation is a frightening reminder that the pandemic is still a significant worry and that Americans cannot be crushed by student debt as they bear this health and economic crisis.
Some Democrats have also argued that restarting student loan payments — which have been suspended for nearly two years — would be a poor political decision for Biden to make in the midst of a difficult midterm election year.
Democratic Rep. Alexandria Ocasio-Cortez, D-New York, said in a tweet this week that it was “delusional” to imagine that Democrats could win another term in office without addressing student debt relief, among other issues.
It was in March 2020 that former President Donald Trump signed into law the CARES Act, which halted payments until September 2020 and reduced interest rates for roughly 42 million borrowers. The moratorium was in effect until September 2020.
Later, Trump took unilateral action to extend the deferral period until January 2021, effectively making it permanent. On his first day in office, President Joe Biden signed an executive order extending it until September 30.
The Biden administration extended the moratorium a second time in September, giving borrowers until January 31 before they were required to commence making monthly payments again.
Education Secretary Arne Duncan said at the time it was the “last extension” and that a “certain end date” would lessen the likelihood of delinquency and default once payments resumed.
Borrowers who have loans that are held in trust are not subject to the moratorium.
Proponents and a number of Democratic legislators have pressed President Joe Biden to take unilateral action to eliminate up to $50,000 in federal student loan debt for all borrowers.
He has stated that, although the United States government lacks the jurisdiction to cancel student debt unilaterally, he would support the passage of legislation that would allow each borrower to have $10,000 in student debt canceled.
Sen. Elizabeth Warren of Massachusetts and Rep. Ayanna Pressley of Massachusetts issued a joint statement on Wednesday praising Biden for extending the halt but urging him to take stronger action.
According to the authors, “extending the pause will assist millions of Americans in making ends meet, particularly as we conquer the Omicron variation.”
President Biden should take executive action to cancel $50,000 in student debt, which will help eliminate the racial wealth gap for debtors and speed our economic recovery, as we have requested in the past.
In a statement, the White House stated that the Education Department is investigating Biden’s legal ability to wipe out student debt through executive action, but it did not provide a date for when the review will be completed.
Initial indications were that the assessment would be completed this spring, according to White House chief of staff Ron Klain.
Americans were predicted to owe more than $1.7 trillion in student loans by the Federal Reserve in the third quarter of 2021, according to their estimates.
Students of color, according to studies, are more likely than their white counterparts to incur student debt and to struggle disproportionately to repay it. Students who attended for-profit colleges and universities have the greatest default rates, according to data.