Here’s Why Biden May Really Extend The Student Loan Payment Pause - Forbes

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With the end of an 18-month suspension of federal student loan payments only 90 days away, there are growing signs that President Biden may extend the moratorium beyond its current expiration.

The CARES Act, the stimulus bill that Congress enacted last year in response to the pandemic, temporarily stopped all payments on government-held federal student loans, froze interest, and suspended all collections activities. The broad student loan repayment suspension was supposed to last six months, but it has since been extended several times by both former President Trump and President Biden upon taking office. The current extension of the moratorium is set to end on September 30, 2021 — meaning that millions of student loan borrowers will be resuming repayment in just a few months.

So far, the Biden administration has not announced any further extension. And it is very possible that student loan borrowers will indeed need to resume repayment in October. But a further extension of the student loan payment pause is nevertheless quite possible. Here’s why.

Sustained Pressure to Extend Student Loan Payment Suspension

Student loan borrower activists and advocacy groups have been sounding the alarm about the rapidly approaching expiration of the student loan payment moratorium. They have three main arguments:

Millions of student loan borrowers will be unable to abruptly resume repayment this fall, given the ongoing pandemic and unevenness of the economic recovery. A survey conducted by Student Debt Crisis and Savi found that 90% of student loan borrowers are not ready to resume payments in October.
Student loan servicers will be overwhelmed and unable to handle millions of borrower accounts simultaneously resuming repayment, an event that has no precedent.
Key federal student loan programs have been historically very poorly administered by loan servicers and the U.S. Department of Education, causing widespread harm to borrowers. These programs should be fixed — and at least some student loan debt should be cancelled — before forcing borrowers to resume repayment.

A coalition of these organizations submitted a letter to President Biden last week, urging him to extend the moratorium.

Influential Democrats in Congress have also amped up the pressure. Last week, Senator Elizabeth Warren (D-MA) joined several progressive allies in calling on President Biden to extend the student loan moratorium to March 2022 or beyond. Other powerful Democrats have recently joined in, with Senator Patty Murray (D-WA) and Bobby Scott (D-VA), chairs of the Senate and House Education Committees, sending their own letter to Biden.

It’s Easy To Extend The Student Loan Payment Moratorium

Last month, the Department of Education initiated a series of public hearings, the first step in a comprehensive review and possible overhaul of major federal student loan programs such as income-based repayment plans, Public Service Loan Forgiveness, disability discharges, and Borrower Defense to Repayment. Many of these programs have been plagued by administrative and bureaucratic problems for years. But the process of reforming federal student loan programs through the regulatory process is extraordinality slow and tedious, requiring ongoing input from stakeholders and the public. Finalized regulations are likely years away from implementation.

On the other hand, extending the student loan payment moratorium is easy — it can be done through a straightforward executive action, as President Biden already did on his first day in office in January. And the benefits of the extension would be immediately felt by millions of borrowers.

An Extended Student Loan Repayment Pause Would Buy Time For Wider Reform

The Biden administration has only recently finalized appointments to key positions within the U.S. Department of Education, with Richard Cordray tapped to manage the federal student aid system in May. Advocacy groups have argued that the student loan payment moratorium should be extended to provide the administration with more time to enact key reforms, such as the following:

A 90-day audit of the “broken” Public Service Loan Forgiveness program and automatic student debt cancellation for borrowers who have completed ten or more years of public service, regardless of their specific compliance with the program’s complicated eligibility criteria.
Expansion of relief under the Borrower Defense to Repayment program, which provides student loan forgiveness for borrowers who were defrauded by their schools. The Biden administration has recently chipped away at more restrictive rules enacted under former Education Secretary Betsy DeVos, and has started granting wider relief to more borrowers. But tens of thousands of Borrower Defense applications remain outstanding.
Automatic resolution for borrowers in default on their federal student loans, as the CARES Act provides that the months of suspended payments would count towards loan rehabilitation as if payments were being made.
Broad student loan cancellation — the Biden administration has been conducting a legal review to determine whether the President has authority to unilaterally cancel student loan debt on a wider scale through executive action. The results of that review are ongoing, but could be released soon.

Biden Administration Is Open To A Further Extension Of The Student Loan Moratorium

The Biden administration has suggested on several occasions that the student loan pause could be further extended. At a public event in May, Secretary of Education Miguel Cardona said, “We’re looking at it. Obviously, we’re going to always take the lead from what the data is telling us and where we are as a country with regards to the recovery of the pandemic. [A further extension] is not out of the question.” More recently, Cardona said last week, “We recognize the impact that the pandemic had on our borrowers. And extending the pause is something that we have had conversations about.”

Still, the administration has not definitively stated that a further extension is coming. And officials have not indicated when a final decision may be made or announced. In the meantime, student loan borrowers should plan on resuming repayment in October — but watch for further developments.