Biden administration officials had signaled in recent weeks that they were likely to extend relief, telling federal student loan servicers to hold off on sending notices to borrowers that their monthly payments would be starting. The US official pointed to Susan Rice, the president’s domestic policy adviser, as key in the negotiations securing the extension.
“Since the beginning of the Administration, she has advocated for each pause on the repayment of student loans, including this most recent one,” the official said.
A range of Democrats had urged the Biden administration to extend the pause on payments through at least the end of 2022, which would be long enough to avoid requiring borrowers to make 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 “until at least the end of the year.”
The Democratic chairs of the congressional education committees — Sen. Patty Murray (D-Wash.) and Rep. Bobby Scott (D-Va.) — had also urged the administration to extend the relief until 2023.
“Tens of millions of people with student debt are once again in limbo as Washington plays politics with borrowers’ financial lives,” said Student Borrower Protection Center Executive Director Mike Pierce. “Joe Biden needs to keep his promises to fix the broken student loan system and cancel student debt. As voters head to the polls in November, they will not settle for anything less.”
Many progressives want the payment pause extended as a precursor to wide-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 up for reelection this year, had also called on the Biden administration to at least extend the moratorium into next year.
Some Biden advisers have been reluctant to continue relief because they believe it undercuts the administration’s messaging on the strength of the economic recovery, though last month White House chief of staff Ron Klain signaled 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 that more relief is needed as Americans face higher inflation costs as a result of rising gripping the economy. But some economists have argued that the extension itself could add to the inflation crisis. The New York Fed warned in a report last month that it expected to see a “meaningful rise in delinquencies” on student loans when the 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 Biden administration subsequently used executive action to further extend that relief.
Republicans have been urging the Biden administration to restart student loan payments over concerns about the growing cost to taxpayers. The various extensions of the payment pause have cost more than $100 billion, according to Education Department estimates.
The Biden administration estimates that borrowers collectively save about $5 billion each month in interest that does not accrue on their loans.
Some private student lenders whose business has been harmed by the pandemic relief have been lobbying the Biden administration to end the program and restart federal student loan payments for many borrowers. They’ve called for a partial extension of the pandemic relief that is targeted only to borrowers who are struggling.