We Can Breathe a Sigh of Relief: Biden Paused Federal Student Loan Repayments Until August
Although the news cycle may sometimes feel endlessly negative, at least there’s now one thing to be very happy about: another pause on federal student loan repayments.
The Biden administration just extended the pause on student loan repayments until August 31, making it the sixth extension since the pandemic started in 2020.
While the President previously said the past extension to January 2022 would be the last, a rise in COVID-19 cases led to an extension until May 1, 2022. Now, the push until August is largely due to inflation and ongoing supply chain issues, which are making grocery store shopping (and life in general) that much more expensive.
Biden posted a video on his Twitter account this morning, explaining his decision to extend the pause. He said, “I know folks were hit hard by this pandemic. And though we’ve come a long way in the past year, we’re still recovering from the economic crisis it caused.” The President explained he hopes that the continued pause will “help Americans breathe a little easier as we recover and rebuild from the pandemic.”
The President also said in a statement that the “additional time will assist borrowers in achieving greater financial security and support the Department of Education’s efforts to continue improving student loan programs.”
While most people welcome the pause on repayments, particularly the fact that interest will not accrue on loans, not everyone is satisfied with the decision. For one, Democrat lawmakers sent a letter to Biden last week urging him to set the extension until “at least” the end of the year, also calling for “meaningful student debt cancellation.”
The Congress members’ reasoning? They explained, “restarting repayment will financially destabilize many borrowers and their families, and will cause hardship for many who could not afford repayment.”
They also said, “most borrowers are not financially prepared to shoulder another bill as they face skyrocketing costs for necessities like food and gas” — and as we all know, both of those things are very costly right now.
The pause until August is definitely something to be happy about, but as the letter reads, it’s still not enough. “It does not permanently address the student loan crisis” which has reached a debt total of about $1.6 trillion for 43 million million. However, student debt cancellation would “provide long-term benefits to individuals and the economy, helping families buy their first homes, open a small business, or invest in their retirement.” It would also add “tens of billions of dollars in GDP growth.”
Even worse? Student debt is especially brutal on communities of color: as per the letter, Black students borrow more money to attend college than their white peers and are “three times as likely” to go into default, while Latinos “are more likely to struggle in repaying their loans.” Even more, Latinos with Bachelor’s degrees earn 21% less than white peers, making repayment even more difficult.
In essence, while student debt cancellation would be a game-changer in finally leveling the playing field for our communities, the loan pause is definitely a step in the right direction.
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