Nearly 200 organizations are demanding that President Joe Biden extend the student loan payment pause and cancel student loans.
Here’s what you need to know — and what it means for your student loans.
A cadre of social organizations wrote the president this week, urging him to extend the student loan moratorium beyond August 31, 2022. According to the letter:
- the Biden administration is “rushing” to restart student loan payments;
- don’t threaten the financial security of student loan borrowers to fight inflation;
- student loan cancellation must be implemented before student loan payment restart; and
- student loan borrowers aren’t prepared to restart student loan payments
Congress paused federal student loan payments in March 2020, and student loan borrowers haven’t been required to make a single federal student loan payment since then. Collectively, the federal student loan moratorium has granted student loan borrowers more than $130 billion of student loan cancellation. While Biden has extended the student loan payment pause four times since becoming president, social groups and progressive members of Congress are urging Biden to extend the moratorium for the fifth time. Why? They argue that student loan borrowers are struggling financially in the wake of the Covid-19 pandemic and the Biden administration hasn’t fully revamped student loan repayment. That said, Biden agreed to cancel $6 billion for 200,000 student loan borrowers last week. (Here are 5 major changes to student loans).
Biden must cancel student loans before restarting the student loan payment pause
The 180 organizations write that Biden must cancel student loans before student loan payments can restart. According to the letter:
- Biden should a “substantial” amount of student loans for “all student loan borrowers” (which suggests both private and federal student loans);
- Student loan cancellation will provide “desperately-needed relief” for millions of student loan borrowers;
- Student loan forgiveness will strengthen the economy and the nation, while also relieving financial pressure for student loan borrowers;
- Student loan cancellation shouldn’t have any income cap; and
- Student loan forgiveness should be automatic rather than require student loan borrowers to navigate a complex, bureaucratic process.
Until Biden develops a clear pathway for student loan cancellation, the organizations argue that student loan payments cannot restart.
Student loan cancellation and student loan payment pause: next steps
Biden has three major decisions on student loans to make in the coming weeks. Two of those decisions include wide-scale student loan cancellation and the student loan payment pause. The framework for student loan cancellation could look like this. U.S. Secretary of Education Miguel Cardona has said Biden could extend the student loan payment pause, although Biden hasn’t commented publicly on whether he would. Biden is likely to announce his decision on both topics in the coming weeks. Opponents say extending the student loan payment pause and enacting wide-scale student loan cancellation will increase inflation. The student loan payment pause ends on August 31, 2022, which means federal student loan payments start beginning September 1. Make sure you evaluate all your options to find the best student loan repayment strategy based on your unique financial circumstances:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)