Education Department urges Biden to extend student loan relief

1

.cms-textAlign-left{text-align:left;}.cms-textAlign-center{text-align:center;}.cms-textAlign-right{text-align:right;}.cms-magazineStyles-smallCaps{font-variant:small-caps;}

Education Department officials are recommending that the White House once again extend the pause on federal student loan payments, according to people familiar with the internal discussions, putting more pressure on the Biden administration ahead of a fall deadline.

Those administration voices join a growing chorus of top congressional Democrats and advocacy groups pushing the White House to continue pandemic benefits for more than 40 million student loan borrowers.

The White House has not yet made a final decision on how and when to restart federal student loan payments, which have been frozen since March 2020. But Education Department officials have suggested to the White House that the administration extend loan relief one final time, through the end of January 2022, the sources said.

Some White House advisers support further extending the relief to give the Education Department, which is charged with managing the $1.6 trillion federal student loan portfolio, more time to come up with a plan to ease borrowers back into repayment, according to people familiar with the discussions. But other advisers worry that continuing an emergency pandemic relief program into 2022 could undercut the administration’s messaging about the strength of the economic recovery.

A few advisers have also noted that other pandemic relief measures are ending in the coming months: President Joe Biden has said he will allow enhanced unemployment benefits to expire in September. And the CDC announced its “final extension” of the nationwide eviction moratorium will run through the end of July. The student loan relief, which Biden extended on his first day in office, is set to expire at the end of September. But Education Department officials have not yet instructed the loan servicing companies it hires to handle collections about whether they should plan to resume their work in October.

“The pause was designed to support borrowers impacted by the pandemic and its economic impact,” an administration official said in a statement to POLITICO. “Every day we are making progress with respect to pandemic and economy is recovering. We appreciate that there are still impacts for individual borrowers/families. And ED is working to ensure that struggling borrowers are supported when payments are lifted.”

The administration official said that the Education Department “is working to ensure that struggling borrowers are supported when payments are lifted.” An Education Department spokesperson declined to comment.

The decision over extending the student loan payment pause is also complicated by the larger debate roiling the Biden administration over how to respond to progressive demands for sweeping student debt cancellation.

Top congressional Democrats have stepped up their calls in recent weeks for the Biden administration to continue the freeze on student loan payments until at least March. Consumer advocacy groups, as well as major unions, have made similar pleas. They argue that many borrowers are still struggling and worry that the administration has not yet detailed any sort of outreach plan to help borrowers return to making monthly payments.

Education Secretary Miguel Cardona has not publicly taken a position on whether to extend the student loan payment pause, saying only that it’s a possibility. “We recognize the impact that the pandemic had on our borrowers,” Cardona said during a Senate hearing last month. “Extending the pause is something that we have had conversations about.”

The CARES Act in March 2020 automatically suspended interest and monthly payments for most federal student loan borrowers. The Trump administration then twice extended that relief in 2020. Biden did the same in January.

The Biden administration has also used executive action to expand the pandemic relief benefits to roughly 1 million additional federal student loan borrowers who were excluded from earlier relief programs.

Still, student advocacy groups have urged the Biden administration not to resume collecting student loan payments until the Education Department has enacted a series of reforms to the system.

“The Department should not be thinking about lifting the payment pause without fixing its broken wage garnishment system, moving faster to help defrauded students and ensuring that thousands of borrowers with disabilities who are entitled to relief aren’t placed back in collections,” said Aaron Ament, the president of Student Defense, which sued the Trump administration for failing to halt some student loan payments during the pandemic.

The pandemic relief is saving student loan borrowers approximately $5 billion in interest payments each month, according to the Education Department. Agency staff have been examining the potential costs of a further extension of the payment relief, according to a person familiar with that analysis.

The Education Department under Donald Trump described in a report the potential restart of payments as a “heavy burden” for the department. The report also predicted a spike in delinquencies when the payment relief expires.

Biden has said he’s opposed to the most sweeping progressive proposals to cancel $50,000 of student loan debt per borrower through executive action. But the White House has tasked the Education and Justice Departments to review options for using executive action to provide some amount of student debt relief. It hasn’t reached a final decision on the issue.

Some progressives who are pushing for an extension of student loan relief hope that it’s a prelude to the widespread cancellation of student loan debt that they’ve been seeking.

But it’s not just the most progressive members who are concerned about sending student loan bills to their constituents in the coming months. Sen. Kyrsten Sinema (D-Ariz.), a moderate, signed onto a letter with Senate Majority Leader Chuck Schumer and Sen. Elizabeth Warren (D-Mass.) calling for an extension of the monthly payment relief through at least next March or until the economy improves further.

“We're calling on the administration to extend the pause on student loan payments to help support Arizona families as we continue our coronavirus recovery,” Sinema said on Twitter on Tuesday. “Extending the current pause on federal student loan payments will provide relief to Arizonans and help them continue to recover from the coronavirus recession.”

The chairs of the congressional education committees, who have been more guarded in their calls for student debt relief than other Democrats, have also urged the White House to continue the relief “once more” into “early 2022.”

Sen. Patty Murray (D-Wash.) and Rep. Bobby Scott (D-Va.) said in a letter to Biden that the extra time would allow the Education Department to provide borrowers “with an effective re-entry for repayment.”

GOP leaders on education policy in Congress, meanwhile, have said that it’s time for the federal government to resume collecting monthly payments, citing the cost to taxpayers of the loan forbearance.

Sen. Richard Burr (R-N.C.) and Rep. Virginia Foxx (R-N.C.), the ranking members of the congressional education committees, said the Biden administration should avoid yet another extension of the relief.

Some private student loan industry players are also hoping the Education Department turns on payments this fall, at least for some borrowers.

The American Fintech Council, whose members include SoFi, Navient-owned Earnest, and other student loan refinance companies that compete with federal student loans, is calling on the Biden administration to avoid another “blanket” extension of relief.

The group earlier this month urged the administration to provide “relief to those in need” while restarting payments “for those who can meet their obligations.”

View original post