Borrowers will not have to make payments until October 1 at the earliest, extending the already unprecedented pause in payments by eight months.
When the economy began to shut down in response to the pandemic in March, Congress passed a blanket relief bill that automatically halted student loan payments and canceled interest. The scholarship was originally scheduled to expire in September, but it was Extended by Trump Administration until January 31.
Both pausing payments and waiving interest are automatic, but only apply to federal loans.
That covers nearly 85% of all federal student loans, including those known as federal direct loans and PLUS loans that parents take in on behalf of their children. It excludes some federal loans that are guaranteed by the government but not technically possessed by them. In general, it was spent before 2010.
The balances were frozen in March 2020, although borrowers were allowed to continue making payments. Enrolled in a public service loan exemption payment plan Will continue to receive credit As if they would keep paying, as long as they are still working full time for qualified employers.
Squeeze for bigger moves
The progressive Democrats are already putting pressure on Biden to go further and cancel billions of dollars in student loan debt altogether. Senate Democratic Leader Chuck Schumer and Massachusetts Democratic Senator Elizabeth Warren called for $ 50,000 forgiveness of student loan debt to each borrower, arguing that it would provide relief to millions of people struggling with the pandemic, stimulate the economy, and help shut down racial wealth the difference.
Warren argued that the Secretary of Education has the authority to repeal federal student loans, a claim supported in note Of the attorneys at Harvard Legal Services Center and her project on predatory student lending.
Former Education Secretary Betsy DeVos has been fiercely opposed to Democrats’ proposals to cancel debt recently Criticize Politicians pushing for the “really malicious idea of making government grants” in remarks at a federal student aid conference.
But Biden may be reluctant to unilaterally get rid of debt and would prefer the move to be approved by Congress. It would be an unprecedented move that might not win the support of the more moderate members of the Democratic Party. a a study From the Responsible Federal Budget Committee found that canceling student debt would provide a relatively small boost to the economy and that most of the waivers would go to high income earners who tend to have higher debt.
During his campaign, Biden called for the cancellation of $ 10,000 per borrower. On Tuesday, Brian Deiss, his chosen one to lead the National Economic Council, said he continues to support Congress in passing a bill that would do just that.
Biden did not include any student debt cancellations in A. $ 1.9 trillion relief plan It was unveiled last week. But he has pushed for that in a second economic bill he is expected to introduce in February that focuses on economic recovery.
The Biden administration may be more likely to unilaterally expand the more targeted loan forgiveness programs that already exist, such as those that provide relief to students who have been defrauded by for-profit colleges. There are thousands of borrowers People who applied for relief under this program but waited years to see if they were eligibleDeVos has stopped processing claims.