President Biden is nearing decisions on key student loan relief initiatives including a possible extension of the student loan pause into 2023, and enacting some form of broad student loan forgiveness.
Here’s the latest.
Biden May Extend Student Loan Pause to 2023
Following passage of the CARES Act in March 2020, payments and interest on government-held federal student loans were suspended. That pause was originally intended to continue for six months, but President Trump (and then President Biden) issued several short-term extensions, often at the last minute. Biden’s most recent extension of the student loan pause ends on August 31 — only 35 days from now.
The Biden administration appears to be signaling that another extension of the student loan pause is in the works. This week, the Education Department reportedly notified its contracted student loan servicers to not send out billing notices to borrowers — a sign that it does not anticipate asking borrowers for payments in the near future. This follows prior statements by top administration officials who in recent months have noted that borrowers would have advance notice, and ample opportunity to prepare, before student loan billing resumes.
Recent reports indicate that Biden is considering extending the pause through at least the end of the year, and possibly to the summer of 2023 — nearly a full additional year. July 1, 2023 is a key date for borrowers as this would be the earliest that an overhaul of several federal student loan programs would be in effect. The Education Department released proposed new regulations governing this overhaul earlier this month, but the process must go through several additional steps before the reforms can be implemented. The overhaul includes changes and improvements to several federal student loan forgiveness programs, as well reforms of other aspects of the federal student loan system, including interest capitalization.
Education Department to Release New Student Loan Repayment Plan Soon
Part of the Education Department’s overhaul of federal student loan programs will also include the creation of a new income-driven repayment (IDR) plan — a type of plan tied to a borrower’s income. Advocates for borrowers have long information that the current patchwork of IDR options is confusing and inadequate, and can effectively trap borrowers in debt for decades. The Education Department proposed a new IDR plan during negotiated rulemaking sessions last year, but stakeholders were unable to reach consensus on key details.
The Biden administration did not include a new IDR proposal with its release of proposed new regulations earlier in July. But top Education Department officials now expect the plan to be released”in the coming weeks, The new IDR plan should be available to borrowers by July 2023, along with the other student loan reforms that are part of the Department’s broad regulatory overhaul. This could be another reason for the administration to push out the student loan payment pause to 2023.
Biden Still Considering Broader Student Loan Forgiveness
Biden is also still considering whether to enact some form of mass student loan forgiveness. He has expressed at least some openness to using executive action to enact broad student loan forgiveness during the last several months — a shift from his earlier position. Biden had campaigned on a pledge to support $10,000 in federal student loan forgiveness for most borrowers, but he had been reluctant to use executive action to implement it, citing uncertainty about whether he had the legal authority to do so.
Earlier this week, however, the Education Department indicated in a court filing that it endorses a key legal argument pushed by student loan borrower advocates and progressives in Congress that a provision of the Higher Education Act confers broad authority on the Secretary of Education to cancel federal student debt. While officials have stressed that Biden has not made any decision yet on broad student loan forgiveness, the court filing could be a sign of the administration’s position on Biden’s potential legal authority.
“As far as [student] loan cancellation, [President Biden] understands what this means for families, how burdensome this can be,” said White House Press Secretary Karine Jean-Pierre yesterday. “He said himself, by the end of August, so that’s right around the corner… He’ll make a decision.”
Further Student Loan Reading
134 Groups Urge Biden To Extend Expiring Student Loan Forgiveness Initiatives, While Top Officials Tell Borrowers To Apply Now
Biden Administration Has Approved $26 Billion In Student Loan Forgiveness, But Borrowers Face Deepening Uncertainty
3 Key Student Loan Forgiveness Opportunities May End Soon — Here’s How To Apply
If You Went To These Schools, You May Qualify For Student Loan Forgiveness: Here’s What To Do
Credit: www.forbes.com /