With less than three weeks to go until the federal student loan repayment pause expires, millions of borrowers still don’t know whether President Joe Biden will extend the current payment moratorium or possibly cancel any of their debts.
Borrower balances have effectively been frozen for more than two years, with no payments required on most federal student loans since March 2020 — when the coronavirus pandemic sent many Americans into lockdown. Meanwhile, interest ceased to accrue and collections on defaulted debts were suspended.
Now, with the fate of borrowers hanging in the balance, the president is set to spend several days on a long-awaited vacation. And the Biden administration has sent no public signal to suggest it will announce a student loan decision while he is gone.
Activists and student loan advocates took part in a virtual meeting with White House officials earlier Thursday, according to a White House official, who said the session was held at the groups’ request.
Officials from the White House Domestic Policy Council, National Economic Council, Office of Public Engagement and Office of Political Strategy and Outreach were scheduled to attend. And Biden, who flew to South Carolina to start his vacation on Wednesday, did not attend the meeting.
Politico was the first to report on the meeting.
As the payment suspension deadline approaches, Natalia Abrams, president and founder of the Student Debt Crisis Center, called on the president to meet with borrowers.
“We have seen the same reports. … The meeting indicates that it was with White House officials, organizations and advocates, but what we miss is that we have yet to see the administration and President Biden have a meeting with the borrowers themselves,” Abrams said.
Biden has already extended the break four times and has repeatedly argued that it is necessary to allow borrowers to get back on their feet. In April – when he last extended the repayment pause – he said that even though the economy had strengthened, the country was “still recovering from the pandemic and the unprecedented economic disruption that she had caused”.
Democratic lawmakers and advocates have called on Biden to globally forgive up to $50,000 in student loan debt per borrower, but the president said he would ignore that number.
In addition to potentially extending the pause, the White House has suggested Biden consider forfeiting $10,000 per borrower, excluding those earning more than $125,000 a year.
“We haven’t made a decision yet. … The Department of Education will communicate directly with borrowers about the end of the payment pause when a decision is made,” White House press secretary Karine Jean-Pierre told reporters on Tuesday. . “As far as cancellation … the President understands firsthand the burden a student loan places on families … and so we will just continue to evaluate our cancellation options.”
Jean-Pierre pointed out that Biden will have something to announce “before August 31.”
With just three weeks until student loan managers resume collecting federal student loan payments, Biden and his team are cutting it. Normally, loan officers send out billing statements at least 21 days before a payment is due, but those haven’t come out yet since Biden is still making up his mind.
“For several weeks, there have been no changes to guidance from the Department of Education. Service agents have been asked not to send communications about resuming payments,” said Scott Buchanan, Executive Director of the Student Loan Servicing Alliance, a non-profit trade group whose members are responsible for servicing over 95% of all federal student loans.
While Biden did not announce a decision on announced student loans before ditching Washington for the beaches of South Carolina on Wednesday, he enters his vacation with the headwind of a successful and chaotic few weeks in the White House.
Over the past three weeks, Biden has dealt with a case of Covid-19 and a subsequent rebound, he has signed into law two major bipartisan laws, he has given the green light to the targeted killing of the man who succeeded Osama Bin Laden in as leader of al-Qaeda, and the Senate managed to pass a slimmed down version of its landmark climate and health care bill.
Meanwhile, despite concerns last month over the prospect of a recession, national unemployment figures have defied economists’ expectations, gasoline prices have continued to fall in recent weeks and inflation has risen. eased in July. However, Americans are still paying more for everyday items like food, gas and vehicles than they are used to, leaving less room in their budget.
The midterm elections are less than 100 days away and CNN’s latest data shows Biden’s approval rating remains low.
Americans’ attitudes toward student debt relief are sharply divided along partisan and generational lines.
A majority of Democrats in a CNN poll in May (56%) — and an even larger majority of self-described liberals (69%) — say the government is doing too little on student loan debt, according to the CNN poll, as only a third of self-proclaimed Republicans and conservatives say the same. Seventy percent of adults under 35 say the government is doing too little, a figure that drops to 50% among those aged 35-49 and 35% among those aged 50 or over.
Maintaining forbearance or canceling debt could provide financial relief to borrowers. But a broad student loan forgiveness would also shift the cost — likely hundreds of billions of dollars — onto taxpayers, including those who have chosen not to go to college or who have already paid for their education. Canceling loans could also contribute to inflation without doing anything to address the root of the problem: college affordability.
And the president, so far, has failed to get most of his affordability proposals approved by Congress. The latest iteration of his social safety net bill, called the Cut Inflation Act, was approved by the Senate this month and is now heading to the Democratic-controlled House of Representatives to a vote. But the bill does not contain previously proposed provisions that would have reduced the cost of a college education.
Outside of pausing payments and executive action to largely forgive student loan debt, there are several other ways many of the 43 million federal student loan borrowers may qualify for forgiveness. student loan. Targeted debt cancellation programs already exist to help public sector workers and borrowers who have been defrauded by their for-profit college, for example.
And under Biden, some of those programs have been temporarily expanded, making it easier for some borrowers to qualify for a discount. The administration has approved more than $26 billion in targeted cancellations for more than 1.3 million borrowers — more than under any other president.