The Chances That Biden Will Extend The Student Loan Pause Just Went Up — But Questions Remain

As Biden’s sweeping student loan forgiveness program faces significant legal setbacks, attention is turning to the ongoing pause on student loan payments. That relief is set to expire on December 31, after multiple extensions by two presidents over the course of nearly three years.

But while this was widely expected to be the final few months of the student loan pause, the legal battle surrounding Biden’s student loan forgivenes initiative is putting pressure on the administration to extend the pause yet again. Here’s where things stand.

Biden Administration Had Linked Student Loan Forgiveness and Student Loan Pause

Biden announced his unprecedented student loan forgiveness program in August. Under the initiative, millions of federal student loan borrowers with government-held loans could receive one-time student loan forgiveness of $10,000 or more. A substantial portion of the 40 million borrowers who would qualify were expected to have their loan balances significantly reduced or even eliminated.

The initiative was set to take off this month. 26 million borrowers submitted a student loan forgiveness application in October, and the Education Department had already approved 16 million of those borrowers for loan forgiveness. But last week, a federal court in Texas struck down the program as illegal, and the Education Department suspended applications for the program. The Biden administration has vowed to appeal, but the future of the initiative is now in doubt, and the dispute may ultimately end up before the U.S. Supreme Court.

The Biden administration had previously linked the loan forgiveness program with the end of the student loan payment pause, which has been in place since March 2020 as a result of the Covid-19 pandemic. The pause, which has also suspended student loan interest as well as collections efforts against borrowers in default, was originally intended to last six months. But President Trump and President Biden issued multiple short-term extensions.

By December 31 — the end-date of Biden’s most recent extension — the relief will have been in place for nearly three years. Several top administration officials had previously argued that restarting payments in January would serve as an inflationary counterbalance for widespread student loan forgiveness. And Biden had announced the “final” extension of the student loan pause to the end of the year in conjunction with his unveiling of the one-time student loan forgiveness initiative.

Advocacy Groups Call on Biden to Extend Student Loan Pause Again In Response to Court Ruling on Student Loan Forgiveness

Facing the possibility of a protracted legal battle over Biden’s student loan forgiveness initiative, advocacy groups are now calling on the administration to extend the student loan pause yet again.

“The devastating result of this court’s decision… is that tens of millions of student loan borrowers across the country now have their vital debt relief blocked,” said Student Borrower Protection Center deputy executive director and managing counsel Persis Yu in a statement last week. “It is disappointing to see this judge pervert the law in order to achieve a politically motivated outcome. The Biden Administration cannot now resume payments on January 1st. It must use all of its tools to fight to ensure that borrowers receive the debt relief they need.”

“The purpose of the President’s debt cancellation plan is to help middle and working-class Americans heal from the harm caused by the pandemic. We share this mission and will work diligently to ensure each borrower has the resources they need to get back on their feet. That starts right now, with an immediate extension of the federal student loan payment pause,” said Natalia Abrams, President of the Student Debt Crisis Center. “For three years, borrowers have been a political punching bag facing uncertainty about the future of their student loans. The judge’s decision makes the future even more worrisome. President Biden must pause payments further into the future to provide financial stability and peace of mind to 40 million Americans.”

Advocates had also expressed concern that the Education Department’s contracted student loan servicers are not at all ready for millions of borrowers to simultaneously resume repayment, with many borrowers reporting long call hold times and delays in processing applications for repayment and loan forgiveness programs.

Prior pressure campaigns by student loan borrower advocacy groups and progressives in Congress successfully convinced the Biden administration to extend the student loan payment pause in the run-ups to previous expiration dates.

Extension of Pandemic Emergency Could Be Basis for Extending Student Loan Pause

Last week, the Biden administration indicated that it will be extending the public health emergency associated with the Covid-19 pandemic into the spring. The administration did not provide a required 60-day notice to states or healthcare providers in advance of lifting the emergency, which suggests that it will continue for at least another several months.

The extension of the public health emergency is noteworthy because it has been the basis for the multiple extensions of the student loan payment pause implemented by both President Trump and President Biden. Both presidents relied on the HEROES Act of 2003 to implement the extensions via executive order. The HEROES Act allows for the modification of federal student loan programs during national emergencies.

Notably, however, the Biden administration also relied on the HEROES Act to launch the one-time student loan forgiveness initiative, and a federal court struck down the program on the basis that it exceeded allowable authority under the statute. It is unclear if the Biden administration is actively considering another extension of the payment pause, but if it does, it would likely rely on the same statutory basis to implement it.

Further Student Loan Reading

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