As Biden’s student loan cancellation plan gets locked up in courts, hundreds of organizations are urging Biden to extend the student loan payment pause.
More than 200 national, state, and local organizations just put the Biden Administration on blast in an open letter, urging the president to extend the student loan pause currently set to expire on Dec. 31, 2022. If he doesn’t, the letter claims, the results could be disastrous.
As a result of what the Administration called “blatantly political lawsuits,” the President’s plan to forgive a momentous and life-changing amount of student debt for Americans has been stalled indefinitely, putting millions of borrowers at financial risk.
The letter, signed by 225 organizations, calls for Biden to extend the pandemic-era student loan payment pause, which is set to expire at the end of the year.
What Was The Student Loan Payment Pause?
The payment pause started in March 2020 as the world began to struggle with the economic ramifications of a drawn-out and uncertain pandemic. It gave borrowers breathing room to either pay down their loans while interest did not accrue or deal with the ever-worsening financial landscape around them with the threat of monthly student loan payments off of their back. Record-high inflation, mounting health care costs, through-the-roof housing costs, and several rate hikes by the Fed have left many Americans unable to afford basic necessities like housing, food, and utilities.
As a result, borrowers were able to keep billions of dollars in their pockets during the pandemic, and many even took the time to pay down their debt without interest accruing further.
When Biden announced his student loan debt forgiveness plan, which cancelled $10,000 to $20,000 in federal student loans for borrowers making under certain income thresholds, he also announced that he would extend the pandemic payment pause one more time — and that it would expire on Dec. 31, 2022.
But that was before his student loan plan got indefinitely locked up in courts, leading to a situation in which borrowers could be unable to apply for student loan forgiveness or get their loans processed, all while payments are scheduled to begin again and interest is set to resume accrual.
Now, organizations are pushing to get that pause extended as the legal battle for loan cancellation leaves borrowers in extended limbo.
Why Do These Organizations Want The Payment Pause Extended?
The organizations, led by the Student Borrower Protection Center, and including orgs like the American Psychological Association, the ACLU, the NAACP, and Consumer Reports, argued that restarting loan repayment while the state of debt forgiveness is unclear would be catastrophic for the tens of millions of Americans who are depending on that relief to move forward with their financial lives.
“We cannot allow these blatantly political lawsuits to throw millions of borrowers into financial catastrophe," the organizations wrote. "Throwing millions of borrowers back into repayment as the state of debt relief remains uncertain is a recipe for disaster and will result in widespread confusion and set borrowers up for failure."
The letter argues that restarting payments during such uncertain times, immediately on the heels of what would have been a huge financial weight lifted from the shoulders of borrowers, is not only unfair but could also result in loan defaults and have an impact at the polls come election time.
“Just two weeks ago, a new generation of voters were mobilized and driven to the polls in part by the momentum from your promise to deliver on student debt. We urge you to use every legal tool in the government's toolbox in order to keep their faith in government and show them that, despite the threats to it, our democracy is capable of listening to their concerns and meeting their needs.”
“We strongly urge you to extend the pause on student loan payments and continue to use every legal authority at your disposal to fight to ensure that borrowers receive the debt relief they need,” the letter reads.
What’s Happening With The Student Loan Lawsuits?
The Administration has countered the lawsuits with appeals, both to the Supreme Court and a lower court, to have the blocks lifted and to resume accepting and approving loan forgiveness.
Analysts expect the Court to respond to the Administration’s appeal against these lawsuits within weeks.
In the meantime, borrowers who have applied for student loan forgiveness are stuck in limbo, wondering when their loan forgiveness will be processed. Those who did not yet apply before the Biden administration froze applications entirely as a result of the ongoing legal issues are worried about their future, too.
Although the Biden administration has done plenty of work to reform student loans in ways that are not being challenged legally, for borrowers who were expecting to receive $10,000 to $20,000 of forgiveness, these delays — set against the backdrop of student loan payments and interest soon set to resume — are a stressful mix, to say the least.