Less than a month after Democratic lawmakers sent a letter to President Joe Biden urging him to extend the freeze on student-loan repayments through March 31, 2022, Education Department officials are reportedly also pushing the White House for a payment reprieve.
According to reports, officials from the Department of Education have suggested to the Biden administration that another extension be granted through January 2022. The freeze on student-loan repayments has been in place since March 2020 and has subsequently been extended four times. It’s currently set to expire on Sept. 30, 2021.
Student-loan experts and Democratic congressional leaders are wary of the September end date and say that an increased number of borrowers could become delinquent or default on their loans if they’re unprepared to resume payments. More than 44.7 million Americans still have federal student-loan debt. As of yet, the debt has mounted to a record $1.57 trillion.
“This has been a time of financial instability,” says Katie Bossler, a program quality assurance specialist with GreenPath Financial Wellness. “While student-loan debt will be waiting for borrowers when repayment resumes, an extension would provide borrowers time to begin planning and taking steps to manage their budget to set themselves up for success going forward.”
Education officials are also “working to ensure that struggling borrowers are supported when payments are lifted,” according to reports. Bossler reminds borrowers, though, that the payment freeze is simply that—a freeze, and not a cancellation of debt. It could be difficult for borrowers to manage payments when extensions eventually end, she says.
While some White House advisers also support the relief extension, according to reports, others worry that a continued reprieve would undermine how the administration is painting the economic recovery in the U.S.
“What happened after the Great Recession suggests that repayment challenges could linger or accelerate after the pandemic ends,” according to research from the Pew Charitable Trusts.
Where does student-loan debt cancellation stand?
Reports of pressure to extend the payment freeze comes on the heels of the department discharging $55.6 million in loans for students who attended Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute. The Biden administration announced in March two other debt cancellation programs, totaling $2.3 billion, for other defrauded borrowers and borrowers with permanent disabilities.
Universal student-debt cancellation still hangs in the balance. While Biden supported paying off $10,000 per borrower on the campaign trail, the funding for that plan was noticeably absent from his latest budget proposal. However, the Education Department just appointed Toby Merrill, a student-debt cancellation proponent, as a deputy general counsel in the department’s Office of the General Counsel. And some people believe this could be a good sign for borrowers.
