Biden could extend student loan pause through next year, considering further relief, including loan forgiveness
President Biden is poised to make decisions on major student loan relief initiatives, including a possible extension of the student loan pause through 2023 and the enactment of some form of blanket loan relief. students.
Here is the latest.
Biden could extend student loan hiatus until 2023
Following the passage of the CARES Act in March 2020, payments and interest on federal student loans held by the government were suspended. This pause was originally supposed to last six months, but President Trump (and then President Biden) issued several short-term extensions, often at the last minute. The most recent extension of Biden’s student loan suspension ends Aug. 31 — just 35 days away.
The Biden administration appears to be signaling that another student loan pause extension is in the works. This week, the Education Department would have notified its contracted student loan managers not to send billing notices to borrowers – a sign that it does not plan to request payments from borrowers in the near future. This follows earlier statements by senior administration officials who in recent months stressed that borrowers would be warned in advance and given ample opportunity to prepare before student loan billing resumes.
Recent reports indicate that Biden is considering extending the hiatus until at least the end of the year, and possibly until the end of the year. summer 2023 — nearly an additional full year. July 1, 2023 is a key date for borrowers, as it would be the first on which an overhaul of several federal student loan programs would take effect. The Department of Education published 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 as reforms to other aspects of the federal student loan system, including interest capitalization.
The Ministry of Education will soon release a new student loan repayment plan
Part of the Department of Education’s overhaul of federal student loan programs will also include the creation of a new income-contingent repayment (IDR) plan – a type of plan tied to the borrower’s income. Borrower advocates have long complained that the current patchwork of IDR options is confusing and inadequate, and can effectively trap borrowers in debt for decades. The Department of Education 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 the proposed new regulations earlier in July. But senior Ministry of Education officials now expect the plan to be released.”in the next weeks.” The new IDR plan is expected to 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 the administration is pushing back the student loan payment break until 2023.
Biden still considering broader student loan forgiveness
Biden is also still considering enacting some form of mass student loan forgiveness. He has expressed at least some openness to using executive action to enact broad student loan forgiveness in recent months — a shift from his earlier stance. Biden had campaigned on a pledge to back $10,000 in federal student loan forgiveness for most borrowers, but he was reluctant to use executive action to implement it, citing uncertainty over whether if he had the legal authority to do so.
Earlier this week, however, the Department of Education indicated in a court filing that it endorses a key legal argument being pushed by student loan advocates and progressives in Congress that a provision of the Education Act superior grants broad power to the Secretary of Education to overrule the federal government. student debt. While officials have stressed that Biden has yet to make a decision on a broad student loan forgiveness, the court filing could be a sign of the administration’s stance on Biden’s potential legal authority.
“As it concerns [student] loan cancellation, [President Biden] understands what this means for families, how burdensome it can be,” White House press secretary Karine Jean-Pierre said yesterday. “He said himself, by the end of August, so it’s just around the corner… He’ll make a decision.”
Further Reading on Student Loans
134 groups urge Biden to extend expiring student loan forgiveness initiatives, while top officials tell borrowers to apply now
The Biden administration approved $26 billion in student loan forgiveness, but borrowers face growing uncertainty
3 Key Student Loan Forgiveness Opportunities Could End Soon – Here’s How to Apply
If You’ve Been To These Schools, You May Qualify For Student Loan Forgiveness: Here’s What To Do