The Biden administration has announced that the student low relief will not be extended. Student loan repayments are therefore set to resume from February 1st, 2022. The news was confirmed by the White House press secretary Jen Psaki.
Psaki also said that more details will be released over the coming weeks. The administration also added that it is looking to engage with key stakeholders, including federal student loan borrowers, to see who they can best deal with this transition.
Psaki added that the administration is still assessing the impact of the Omicron virus and the potential effects it could have on the timeline of this decision. At the end of the day, the White House says that it is hoping for a “smooth transition back into repayment” and that the Department of Education is already talking to borrowers to advise them on the way forward.
So, the administration confirmed that the extended loan repayment pause has benefited nearly 41 million students across the US but according to current plans, these extensions will end on February 1st.
The decision by the Biden administration will not be well received by Democratic progressives who have been pushing for student loan forgiveness. Also, the progressive caucus in congress and advocates for borrowers have been logging the white house to extend to the pause on repayments.
They argue that due to the economic disruptions of the pandemic, many borrowers risk suffering severe "financial devastation" if indeed the program is not extended.
Senate Majority Leader Chuck Schumer from New York and her Massachusetts counterpart Elizabeth Warren have all joined the progressive caucus in calling for Biden to rethink this decision. They claim that at least 89% of all student loan borrowers feel they are financially unprepared right now to restart student loan repayments.
They are hoping the White House will postpone the expiration of this repayment pause for at least a few extra months until the economy is more permissive.
But it’s highly unlikely that will happen. Even if there were to be an extension, it is likely to last a very short period. Also, the Biden administration is not considering student loan cancellation. Of course, there are ways students can apply for waivers and cancellations, but they will need to meet certain conditions.
Contrary to what most progressives have been thinking, a wide-scale cancellation of student debt through presidential decree is not going to happen. But despite this, the administration has also done well to cancel a huge chunk of student debt. According to press secretary Psaki, since Biden took over, over $12 billion worth of student loans have been forgiven.
This has benefited roughly 640,000 students, a very small percentage of the total debt. Psaki, when pressed by reporters to indicate if there is any large-scale forgiveness program in the future, simply did not comment. It’s an indication that there is more pain down the road for student loan borrowers.