According to an administration official familiar with the White House’s decision-making, the Biden administration plans to extend a moratorium on federal student loan payments until August 31, extending a moratorium that has allowed millions of Americans to defer payments during the coronavirus pandemic.
10 Points on Student loan moratorium
- After being halted since the beginning of the pandemic, student loan payments were set to resume on May 1. The White House, though, is planning to offer borrowers more time to prepare for payments in response to pleas from Democrats in Congress.
- According to the most recent figures from the Education Department, the measure affects more than 43 million Americans who owe a total of $1.6 trillion in federal student debt.
- More than 7 million borrowers have defaulted on student loans, which means they have missed at least 270 days of payments.
- Borrowers will not be required to make payments until after August 31, and interest rates will remain at 0% during that time.
- Democrats on House and Senate education committees recently pushed President Joe Biden to prolong the ban until the end of the year, noting the ongoing economic uncertainty.
- The St. Louis Federal Reserve Bank warned in March that resuming loan payments could put borrowers who were financially strained during the pandemic under a lot of stress. The impact would be greatest on Black families, who are more likely to use student loans to pay for education, according to the report.
- In March 2020, the Trump administration provided Americans the option of deferring loan payments, and Congress made it automatic shortly after. The Trump administration prolonged the halt twice, and Biden extended it twice more.
- It’s unclear whether Biden will push universal debt forgiveness to help Americans pay down their school loans. Some Democrats in Congress have urged Biden to use executive action to erase $50,000 in student loan debt for all borrowers, arguing that this would assist the economy and benefit Black Americans, who have greater rates of student debt than whites.
- Biden urged the Departments of Education and Justice to look into the constitutionality of mass debt forgiveness last year, but no decision has been made. Biden previously stated that he supports the cancellation of up to $10,000 in debt, but that it should be accomplished by congressional legislation.