The Biden Administration announced Wednesday afternoon that they were extending the moratorium on student loans payments. The Biden Administration says they are extending it due to the new more transmissible omicron variant that is threatening the strength of the economy.
In a statement, President Joe Biden said that “millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments.”
For months the White House has said President Biden plans on continuing the student loan repayments February 1st 2021. They continued to say this warning with the continuing rise of COVID-19 cases and inflation continuing to rise.
In recent days the administration has lessened the language as the omicron variant continued to rise with White House Press Secretary Jen Psaki saying Tuesday the President has “not made a decision yet” on whether to issue another extension.
Democrat lawmakers have been pushing the President to continue the moratorium especially after Senator Joe Manchin of West Virginia said he would not be voting for the Build Back Better bill. In the bill the White House said it would have lowered the inflation rate and lower prescription drug costs.
Some Democrats believe that it would be a bad political decision to restart student loan payments and would be a bad political decision since they have been on pause going on for 2 years. Student loan payments have been on pause since March 2020.
Representative Alexandria Ocasio-Cortez, tweeted last week that it was “delusional” to believe Democrats could get re-elected without acting on student debt relief, among other priorities.
The moratorium began in March 2020, when former President Donald Trump signed into law the CARES Act, which paused payments through September 2020 and eliminated interest rates for the roughly 42 million borrowers.
Former President Trump later took executive action to extend the deferral period through January 2021. President Biden, on his first day in office, signed an executive order continuing it through September 30.
In September the Biden Administration extended it through January 31st 2022 with the Education Department at the time saying it would be “final extension” and that it felt that a “definitive end date” would reduce the risk of delinquency and defaults once payments restart. The moratorium does not apply to borrowers with privately held loans.
Activists and some Democrat leaders think that the Biden Administration should cancel student loans for millions of Americans. President Biden has said he believes that he can not cancel student loans without congressional legislation. The President says he would support legalization to cancel 10,000 dollars worth of student loans.
In a joint statement on Wednesday, Senate Majority Leader Chuck Schumer of New York, Senator Elizabeth Warren of Massachusetts and Representative Ayanna Pressley of Massachusetts applauded President Biden for extending the payment pause but urged him to take more aggressive action. “Extending the pause will help millions of Americans make ends meet, especially as we overcome the Omicron variant,” they wrote. “We continue to call on President Biden to take executive action to cancel $50,000 in student debt, which will help close the racial wealth gap for borrowers and accelerate our economic recovery.”
Even though President Biden has said he doesn’t believe he can cancel student loans, the Education Department is looking into the legal authority of the President canceling student loans.
The Federal Reserve estimated that in the third quarter of 2021, Americans owed more than $1.7 trillion in student loans.
