(The hill) — President Joe Biden Wednesday extended the pandemic moratorium on federal student loan repayments and interest accrual through August, ending just three months before the midterm elections.
The president announced the extension until August 31 in a statement, citing the still ongoing recovery from the COVID-19 pandemic.
“To allow Americans to continue to get back on their feet after two of the toughest years this country has ever seen, my administration is extending the pause on federal student loan repayments through August 31, 2022. This additional time will help borrowers to achieve greater financial security and support the Department of Education’s efforts to continue improving student loan programs,” Biden noted.
The freeze was due to expire on May 1 by an extension signed by Biden in December, and the White House was under pressure from nearly 100 Democrats in both chambers to extend it. Loan repayments were first suspended in March 2020 under former President Trump, and the freeze has since been extended five times.
Trump’s order froze the accrual of interest on federal student loans, freezing $1.6 trillion in debt owed by more than 40 million Americans.
Biden said Wednesday that the “economy was barely growing” when he first went on hiatus in January 2021, and that now “America is stronger than we were a year ago.”
“However, as I recognized in recently extending the COVID-19 national emergency, we are still recovering from the pandemic and the unprecedented economic disruption it has caused,” the president said. “If loan repayments were to resume on schedule in May, analysis of recent Federal Reserve data suggests that millions of student borrowers would face significant economic hardship, and that delinquencies and loan defaults could threaten the financial stability of Americans.”
The hill reported for the first time Tuesday that the announcement of another expansion was to come this week, citing multiple sources.
Biden said that in September, when payments resume, the Department of Education “will provide additional flexibilities and support to all borrowers.”
“The Department of Education is committed to ensuring student borrowers have a smooth transition to repayment,” Education Secretary Miguel Cardona said in a statement. “This additional extension will provide borrowers with greater financial security as the economy continues to improve and the country continues to recover from the COVID-19 pandemic.”
The new timeline falls short of the extension deadline requested by some Democrats. Sen. Patty Murray (D-Wash.) was the leading voice in urging the president to extend the freeze through the end of the year, which would restart payments after the midterm elections.
Biden, in his statement on Wednesday, did not mention the cancellation of student loans. During the 2020 campaign, he supported forgiving at least $10,000 in federal student loans per person.
One year ago, Biden requested a memo from the Department of Education to determine its authority to cancel student debt through executive action. Since then, the administration has not publicly announced whether the memo is complete.
Lawyers and other Democrats, including Senate Majority Leader Charles Schumer (DN.Y.), have called for a $50,000 forgiveness per borrower or full debt forgiveness. Schumer again called for a $50,000 rebate on Tuesday after announcing the freeze would be extended.
“Extending the moratorium is a good thing, but of course I think the president should go further and cancel $50,000 in student loans for good,” he said during a speech on Capitol Hill.
Meanwhile, Republican lawmakers have criticized Biden for gel extension. Sen. Tom Cotton (R-Ark.) called the moratorium “insult” and reckless on Tuesday.
“President Biden The perpetual moratorium on student loan payments is an insult to all Americans who have paid their debts responsibly. There is no free lunch: this reckless decision puts taxpayers on the line for billions”, said the senator.
Thomas Gokey, an organizer for the Debt Collective, which advocates for the cancellation of student loans, called it “political misconduct” to restart loan repayments before the midterm.
“The debtors had to fight to get even an extension of the break. We know you can’t interrupt a crisis, Biden can cancel the debt today with a signature. It would be a political mistake to restart payments just before the mid-terms,” he told The Hill.
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