As Biden looks likely to extend student loan suspension, Republicans introduce bill to restart payments
The Biden administration looks increasingly likely to extend the student loan pause, which is currently set to end in just 22 days. Meanwhile, Republicans in Congress have introduced legislation to end student loan relief and restart payments for millions of borrowers.
Here is the latest.
Biden could extend student loan suspension until end of 2022 or next year
Payments on federal student loans held by the government have been suspended since March 2020 under the CARES Act, which Congress passed in the early months of the coronavirus pandemic. The legislation also suspended accrued interest on federal student loans held by the government and halted collection activities against defaulting borrowers.
Congress originally considered a six-month pause on student loan repayments when it passed the legislation, but the relief has been repeatedly extended (often at the last minute) by President Trump and President Biden. August 31 is the last deadline for the expiry of the student loan break.
The Biden administration looks increasingly likely to extend the pause on student loans again as Americans continue to grapple with historically high inflation. Last month, the administration reportedly advised student loan service companies under contract with the U.S. Department of Education to suspend sending billing notices to borrowers, a clear signal officials don’t expect. not to payments from short-term borrowers. Senior Education Department and White House officials, including the Education Secretary, have pointed out in recent months that borrowers would have plenty of warnings before student loan payments resume.
Recent reports suggest that Biden is considering an extension until at least the end of 2022, and possibly until the summer of 2023. Notably, July 1, 2023 will be a critical date for student borrowers, as an overhaul major federal student loan repayments. and loan forgiveness programs should be in effect by then. The Department for Education published proposed new regulations governing this overhaul last month, and details of a new income-based repayment plan could be released within weeks.
Republicans introduce bill to end student loan suspension
Last week, Republicans in Congress led by Representatives Virginia Foxx, Elise Stefanik and Jim Banks introduced legislation designed to stop Biden. The Responsible Education Assistance through Lending (REAL) Reforms Act would undo the suspension of student loans originally authorized by the CARES Act, pushing borrowers back into repayment for the first time in more than two years . The bill would also end the popular but troubled Public Service Loan Waiver (PSLF) for new borrowers, and end student loan forgiveness associated with income-driven repayment plans.
The REAL Reforms Act would also include other student loan reforms that may be popular with borrowers, including the simplification of income-tested repayment plans, caps on accrued interest, and greater flexibility to use PELL grants (which students do not have to reimburse).
“The Biden administration has engaged in massive student loan cancellation behind the backs of Americans without congressional authorization,” Representatives Virginia Foxx, Elise Stefanik and Jim Banks said in a joint statement. Representatives argued that the ongoing suspension of student loans has resulted in “a de facto loan forgiveness of at least $5,500 to each borrower” in the form of suspended payments and interest.
“Instead of placing the burden of this broken student loan system on the shoulders of American taxpayers, we are introducing this bill to fix the system,” they said.
What’s next for student loan suspension and other student loan relief
The Republican bill has little to no chance of passing the House or the Senate, where Democrats hold narrow majorities. And polls show another extension of the student loan pause would be popular with voters. In a March Morning Consult/Politico poll, only a third of those polled would oppose an extension. An extension of the student loan suspension appears to be particularly popular among young voters, with 56% of respondents aged 18 to 34 in favor.
Biden could make an announcement on a further extension of the student loan payment pause at any time. Biden also indicated he would make a final decision on enacting a broad student loan forgiveness by the end of August as well.
Further Reading on Student Loans
5 Growing Signs Biden Could Endorse Broad Student Loan Forgiveness and Extended Student Loan Pause
Biden administration ready to implement mass student loan forgiveness as decision could come any day
Did the Biden administration just drop a big hint on student loan forgiveness?
If You’ve Been To These Schools, You May Qualify For Student Loan Forgiveness: Here’s What To Do