President Joe Biden announced Wednesday that his administration will extend the pause on repayment for federal student loans through August 31, 2022.
Student loans issued and owned by the Department of Education have been in deferment with no interest accrual since March 2020, when President Donald Trump’s CARES Act authorized the Department of Education to stop collecting repayment as the economy closed in response to the coronavirus.
Since then, every single deadline has been extended. Federal student loan repayment was first slated to resume in Sept. 2020, but that August, Trump extended the federal student loan repayment moratorium to Dec. 31, 2020, and then to Jan. 31, 2021.
Upon assuming office, Biden extended the repayment moratorium to Sept. 2021. On Aug. 6, 2021, Biden announced that he was extending the student loan repayment moratorium to Jan. 31, 2021. On Dec. 22, 2021, Biden extended the moratorium to May 1, 2022. In his statement, the president asked borrowers to “do their part as well” and “take full advantage of the Department of Education’s resources to help you prepare for payments to resume.”
Today, the deadline has been pushed back, yet again, to August 31, 2022. “This continued pause will help Americans breathe a little easier as we recover and rebuild from the pandemic,” Biden said.
Prominent Democratic activists and politicians want to reduce or outright cancel student loan debt rather than simply defer payments.
“Student loan debt is holding back tens of millions of people across this country who can’t buy homes, buy cars, or start small businesses. President Biden needs to #CancelStudentDebt not only for those people individually but also for our whole economy.” Senator Elizabeth Warren tweeted in June 2021.
Rep. Troy Carter (D–La.) introduced the Student Loan Relief Act in August 2021, which would have forgiven up to $50,000 in federal student loans.
“It’s Congress’ job to improve the lives of the American people,” Carter said according to a press release. “Easing the enormous burden of student loans for the millions of Americans, young and old, saddled with debt is one of my highest priorities in Congress. This legislation will do just that.”
Biden has proven reluctant to enact wide-scale student loan relief, saying that it would be a giveaway to the most privileged Americans.
“The idea that … I’m going to forgive the debt, the billions of dollars in debt, for people who have gone to Harvard and Yale and Penn …” President Biden said in a town hall hosted by CNN journalist Anderson Cooper in Feb. 2021. Yet some graduates of elite schools are receiving federal student loan debt forgiveness, as are former attendees of dis-accredited and closed for-profit schools.
Critics of universal federal student debt relief argue that it would be a regressive giveaway to the wealthiest Americans. Borrowers with four-year degrees make more money than people who only have high school diplomas, people with graduate degrees make more than people with four-year degrees, etc., etc. Because so much student loan debt belongs to borrowers who used it to increase their earning potential, noted the Brookings Institute’s Adam Looney in a comprehensive report, the burden of loan debt should be measured against future earnings.
“Excluding the value of education from a calculation of net worth while including debt used to finance that education is like measuring a homeowner’s wealth by subtracting their mortgage but ignoring the value of the home itself. You’d find that homeowners were poorer than renters, and that people living in mansions were the poorest members of society.”