Federal pupil loan borrowers and the courts have further time to figure out what’s going on with debt remission before payments capsule. The payment pause has been extended through June 30, 2023.
In a video posted to Twitter on Tuesday, President Joe Biden emphasized his administration’s efforts to provide relief to borrowers through forgiveness that has been hampered by “Republican special interests and elected officials.”
Biden goes on to say, “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.”
Why did the Biden administration extend the payment pause?
Biden campaigned on student debt relief through mass forgiveness and updates to some of the existing forgiveness and repayment programs. But his plan to forgive $10,000 for federal student loan borrowers and $20,000 for Pell Grant recipients has been stalled by politically motivated lawsuits.
When announcing the forgiveness plan, Biden said it was time to restart loan payments since the country had made good progress recovering from the economic fallout of the pandemic.
“We’ve wound down pandemic relief programs like the ones for unemployment insurance and small businesses,” he said in August. “It’s time we do the same thing for student loans,” he added, setting the original December 31 expiration date.
But since forgiveness is currently in limbo, the administration feels it owes it to borrowers to try to have a final answer before payments resume.
When will the student loan payment pause expire?
The pause will now expire on June 30, 2023 unless the courts make a final decision on debt forgiveness before that, in which case payments will resume 60 days later, according to a press release from the Department of Education.
If the courts have not reached a decision by June 30, payments will resume 60 days after that.
Where do the lawsuits stand?
Currently, the lawsuit brought by six states known as Nebraska v. Biden is with the Eighth Circuit Court of Appeals. It is preventing the administration from discharging any debts and accepting more relief applications while it reviews the complaints.
The Biden administration has asked the Supreme Court to overturn that block and allow for the plan to move forward while the legal battles play out.
A separate lawsuit is with the Fifth Circuit Court of Appeals in Texas after a federal district court judge ruled the forgiveness plan unconstitutional, which the Justice Department appealed on Biden’s behalf.
What if the courts strike down debt forgiveness?
Biden has not made any indication of a backup plan if the courts don’t allow debt forgiveness to reach borrowers. With every update, the administration reiterates its commitment to “fighting for borrowers” along with its stance that the action is legal.
In announcing the payment pause extension, the Education Department also highlighted the other steps the administration has taken to address the various problems throughout the student loan system, like revamping the Public Service Student Loan Forgiveness program, forgiving debt for defrauded borrowers and borrowers with disabilities, and clearing the path for borrowers to discharge student debt in bankruptcy.