Biden administration extends student loan payment pause

Decision comes as Omicron variant spreads in US and progressives warn of midterm minefield

President Joe Biden announced that his administration was extending the pause on federal student loan repayments until May, after weeks of federal officials claiming that the pause would end in February.

Mr Biden said in a statement on Wednesday that the decision was made in response to an understanding that millions of Americans with outstanding student loan debt are “still coping with the impacts of the pandemic and need some more time before resuming payments”.

“Given these considerations, today my Administration is extending the pause on federal student loan repayments for an additional 90 days — through May 1, 2022 — as we manage the ongoing pandemic and further strengthen our economic recovery. Meanwhile, the Department of Education will continue working with borrowers to ensure they have the support they need to transition smoothly back into repayment and advance economic stability for their own households and for our nation,” said Mr Biden.

The moved was immediately cheered by progressives including Sen Elizabeth Warren and Rep Ayanna Pressley, both of Massachusetts, who along with Senate Majority Leader Chuck Schumer of New York have long urged the president to go further than extending the pause and move through executive action to cancel some or all of Americans’ individual student loans.

The three lawmakers released a joint statement minutes after the announcement, which reiterated their position that Mr Biden should use executive action to void up to $50,000 in student loan debt for every American with a loan through the Department of Education.

“We’re pleased the Biden administration has heeded our call to extend the pause on student loan payments. As we stated in our December 8th letter, the pause on federal student loan payments, interest, and collections has improved borrowers’ economic security, allowing them to invest in their families, save for emergencies, and pay down other debt. Extending the pause will help millions of Americans make ends meet, especially as we overcome the Omicron variant,” said the three lawmakers.

They added: “We continue to call on President Biden to take executive action to cancel $50,000 in student debt, which will help close the racial wealth gap for borrowers and accelerate our economic recovery.”

Student loan repayments in the US have been paused since the CARES Act, the Democrat-led bill that instituted a round of economic stimulus for US citizens and businesses earlier this year in response to the ongoing Covid-19 pandemic. Democrats had campaigned on passing such a bill with control of the Senate, which they achieved in January after winning two runoff elections in Georgia.

That pause was initially set to end last year, but Mr Biden moved in August to announce an extension through the first month of 2022. In recent weeks, pressure intensified on the White House to act once more given the failure (at least so far) of the Democratic majority in the Senate to pass Mr Biden’s signature Build Back Better Act, leaving many in the party fuming publicly over a lack of achievements to present to voters ahead of the 2022 midterms.

Complicating the issue is the end, at least temporarily, of monthly payments to US families under the Child Tax Credit, a provision that most Democrats hoped to extend through 2022 (and importantly through the midterm season) by passing the Build Back Better Act. Coming into this week, the White House faced the ugly scenario of those payments ending just as student loan repayments were set to resume for millions.

A statement from the Education Department appeared to leave open the possibility for future action by the Biden administration, as it declared that Wednesday’s action would allow the federal government time to “assess the impacts of Omicron on student borrowers”.

“As we prepare for the return to repayment in May, we will continue to provide tools and supports to borrowers so they can enter into the repayment plan that is responsive to their financial situation, such as an income-driven repayment plan. Students and borrowers will always be at the center of our work at the Department, and we are committed to not only ensuring a smooth return to repayment, but also increasing accountability and stronger customer service from our loan servicers as borrowers prepare for repayment,” said Education Secretary Miguel Cardona.