Biden extends student loan payment pause as debt relief plan remains on hold
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WASHINGTON (NBC News) — The Biden administration announced Tuesday that it would extend the payment pause on federal student loans, as President Joe Biden’s debt cancellation plan remains blocked in court.
The payment pause, which was previously set to expire in January, will be extended until June 30 or until the litigation is resolved — whichever comes first. If the litigation has not been resolved by June 30, payments will resume 60 days after that.
“I’m completely confident that my plan is legal,” Biden said in a video announcement. “But 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 lawsuit.”
Biden in August announced he would cancel up to $20,000 in debt per eligible borrower, but the move was quickly met with legal challenges.
The Biden administration last week asked the Supreme Court to reinstate the loan forgiveness plan after it had been blocked by a federal appeals court.
Biden said that the new June 30 deadline for student loan payments to resume would give the Supreme Court enough time to hear the case.
Federal student loan holders have not been required to make payments since March 2020, when President Donald Trump signed the CARES Act, which paused payments through September 2020 and stopped interest from accruing to alleviate the economic impact of the coronavirus pandemic.
Trump later took executive action to extend the deferral period through January 2021. Biden has issued six more extensions since taking office.
The moratorium does not apply to borrowers with privately held loans.
About 45 million people in the U.S. have student debt. The Federal Reserve estimated that in the third quarter of 2022, people owed more than $1.7 trillion in student loans.
The Biden administration has expressed confidence that it will prevail in court, but officials have been unable to say what other policies the White House will pursue to alleviate student debt should the courts reject Biden’s cancellation plan.