Biden administration extends the student loan pause through May 1—but advocates call for all student debt to be canceled
Today, the U.S. Department of Education announced a 90-day extension of the pause on student loan repayment, interest and collections, through May 1, 2022.
The extension will allow the administration to "assess the impacts of the Omicron variant on student borrowers and provide additional time for borrowers to plan for the resumption of payments and reduce the risk of delinquency and defaults after restart," the department said.
But many of those who called for the moratorium to be extended said pausing student loan payments is not enough, that they should be canceled.
"[The extension] is a major win for 45 million student debtors and their families," Braxton Brewington, a spokesperson for The Debt Collective, a national union for debt holders, says in a statement sent to CNBC Make It. "For at least a few more months, struggling families will be able to keep tens of billions of dollars in their pockets."
However, a pause should be just the first step in addressing the student loan crisis, Brewington says.
"Next, the Biden administration should permanently relieve this financial burden on families and the economy by using his executive authority to eliminate all federal student debt," he says. "With the stroke of a pen, Biden can dramatically boost the economy, narrow the racial wealth gap, keep a key campaign promise and deliver a much-needed jubilee for the 99%."
Politicians who advocated for the pause to be extended, such as Sen. Elizabeth Warren, D-Mass., celebrated the announcement but called for broad-based student loan cancellation on social media.
"I'm deeply grateful for everyone who joined this fight, called on the administration to extend the pause, and got this done," tweeted Warren. "Raising your voice matters. It's how we make change, and it's how we're going to take the next step to #CancelStudentDebt."
"Huge news for student loan borrowers," tweeted Rep. Carolyn Maloney, D-N.Y. "We must get through this pandemic, and we must #CancelStudentDebt."
House and Senate Democrats have repeatedly urged President Joe Biden to "broadly" forgive up to $50,000 of federal debt through executive order. Biden has consistently indicated that he will only support up to $10,000 of debt forgiveness and that he would prefer Congress craft the legislation. It currently appears unlikely that Congress would pass such a measure.
Since March 27, 2020, payments on federal student loans have been paused and the federal student loan interest rate has been set to 0%. This student loan moratorium was previously set to expire Jan. 31, 2022, and payments were set to resume Feb. 1.
Recently, hundreds of organizations such as the American Civil Liberties Union, the American Federation of Teachers, the NAACP and the Student Borrower Protection Center, or SBPC, asked Biden to extend the pause — arguing that borrowers and servicers are not prepared for loan payments to resume. These concerns have now been exacerbated by the Covid omicron variant, which is expected to impact workers and borrowers across the country.
The Department of Education estimates that the pause on federal student loan payments allows 41 million borrowers to save a total of $5 billion per month.
"President Biden and Vice President Harris threw a lifeline to tens of millions of people with student debt, ensuring a student loan bill will not add to the financial burden posed by rising inflation and a resurgent pandemic. This is an enormous relief for families who would have been forced to choose between paying student loan bills and putting food on the table this winter," says Mike Pierce, executive director of the SBPC.
"Although we commend the administration for delivering this necessary, short-term relief to people with student debt, we continue to advocate for the extension of the pause on student loan payments until the end of the COVID-19 national emergency, giving the Department of Education time to fix the broken student loan system and finally keep the president's promise to cancel student debt," Pierce said.