President Biden extends moratorium on student loan payments
Written by Cheyenne Haslett ABC News on November 24, 2022
(WASHINGTON) — The Biden administration will extend the pause on student loan payments once again, President Joe Biden announced on Tuesday, as the program to cancel millions of peoples’ student loans remains tied up in the courts.
The extension is intended to give the Supreme Court time to rule on the lawsuits brought against Biden’s student loan program during its upcoming term. The pause on payments will lift either 60 days after the Supreme Court issues a decision on the program, or 60 days after June 30, depending on which date comes first, the Department of Education said.
“It isn’t fair to ask tens of millions of borrowers eligible for relief to resume their student debt payments while the courts consider the lawsuits. For that reason, the Secretary of Education is extending the pause on student loan payments while we seek relief from the court,” Biden said in a video posted by the White House on Tuesday afternoon.
Biden’s plan aimed to cancel $20,000 of debt for people who received Pell Grants in college and $10,000 for all other borrowers, so long as they earn less than $125,000, or $250,000 as a married couple. In recent weeks, the plan was blocked by Republican-led lawsuits in the Eighth Circuit Court of Appeals and the Northern District of Texas. Last week, the Biden administration asked the Supreme Court to overturn the recent ruling in the Eighth Circuit that halted the relief program, or to consider hearing the case before the court during its upcoming term.
“I’m completely confident my plan is legal,” Biden said in the video. “I’m never going to apologize for helping working class and middle class families recover from the economic crisis created by the pandemic. And I’ll continue working to make government work to deliver for all Americans for all Americans.”
In a statement, Education Secretary Miguel Cardona said officials also considered the “tremendous financial uncertainty” that lifting the moratorium would cause ahead of the holidays.
“Callous efforts to block student debt relief in the courts have caused tremendous financial uncertainty for millions of borrowers who cannot set their family budgets or even plan for the holidays without a clear picture of their student debt obligations, and it’s just plain wrong,” said Cardona.
“We’re extending the payment pause because it would be deeply unfair to ask borrowers to pay a debt that they wouldn’t have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests,” he added.
Student debt advocacy groups, many of which had been pressuring the administration, commended the extension.
“This extension means that struggling borrowers will be able to keep food on their tables during the holiday season — and the coming months — as the Administration does everything it can to beat back the baseless and backward attacks on working families with student debt. Win or lose, borrowers can depend on President Biden to keep his promise and deliver student debt relief,” said Mike Pierce, executive director for the Student Borrower Protection Center.
The moratorium on student loan payments, which has been in place for about two years, was scheduled to expire on Dec. 31, with payments resuming on Jan. 1. It was put in place under former President Donald Trump in March 2020 and extended twice before Biden took office. Biden has since extended it six times.
But the Biden administration has argued that the moratorium could only lift in conjunction with Biden’s debt relief program going into effect, easing the transition for people who haven’t had to pay their loans down for years. Extending the moratorium also avoids the messy situation where borrowers restart paying their loans while the relief program is on hold, and then get them canceled, but want refunds on the money they’d begun paying.
Conservative groups have brought lawsuits arguing that Biden’s plan exceeds his administration’s power, that the program unfairly excludes Americans who won’t receive debt relief and that certain loan servicers will lose revenue.
The Biden administration has pushed back on arguments about who qualifies, defending their decision to only give relief to people making below a certain income, and said that the court cases don’t have standing because no one is being harmed by the debt relief program. The administration has also argued that Cardona is completely within his authority to cancel debt because of a law called the HEROES Act, which gives the power to cancel loans during a national state of emergency like the pandemic.
“On the merits, the plan falls squarely within the plain text of the Secretary’s statutory authority,” Solicitor General Elizabeth Prelogar wrote in the recent Supreme Court filing.
“Indeed, the entire purpose of the HEROES Act is to authorize the Secretary to grant student-loan-related relief to at-risk borrowers because of a national emergency — precisely what the Secretary did here,” Prelogar wrote.
It is the secretary’s job “to ensure that borrowers affected by a national emergency are not worse off in relation to their student loans,” Prelogar argued, and if the Department of Education didn’t act, there could be a “spike” in loan defaults when the pause on student loan payments lifts in January.
Officials rolled the program out in late August with the pledge that anyone who applied before mid-November could have their loans canceled by the time payments resumed. The application, a simple form on the Department of Education’s website, shut down in mid-November after a ruling from the Texas court.
But the Department of Education said 26 million applications had already been received, and 16 million had already been approved for relief, ready for when the department is legally able to discharge it.
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