WASHINGTON — The Biden administration is being urged by Congress Democrats to give more information about its plans to resume federal student loan payments. However, there are concerns that the two-year pause could lead to chaos if it ends in May.
A group of legislators wrote to the Education Department asking them to answer a lengthy list of questions. This was to show that the government is not prepared to inform borrowers before they resume payments on May 1.
This letter is just the latest indication of President Joe Biden’s growing pressure to extend the payments pause. Since March 2020, federal student loan payments have been frozen.
“While we applaud the Biden Administration’s efforts to extend the payment suspension amid the COVID-19 pandemic,” the lawmakers wrote. They also expressed concern that borrowers might not be able to understand the timelines for the resumption of payments with less than 70 days remaining.
The Sens. signed the letter led by Senator Elizabeth Warren of Massachusetts, Reps. Lauren Underwood from Illinois, and Colin Allred from Texas. Maggie Hassan from New Hampshire, Tammy Duckworth (Illinois), and Reps. Lucy McBath (Georgia), Dina Titus (Nevada) and Bill Foster (Illinois).
Progressives have been pressing Biden for weeks to extend his payment pause and address more sweeping loan forgiveness. However, the letter Thursday was signed by moderate members of the party, suggesting that vulnerable Democrats may feel pressure to offer more financial relief to constituents in light of ongoing Covid pandemic as well as the growing concern about inflation.
The president’s party usually loses congressional seats during midterm elections. With such small majorities in both the House and Senate Democrats have been anticipating a difficult November.
Some Democrats argue that student loan payments must be made in May to reinstate their eligibility, particularly since Biden has not been able to deliver on his legislative priorities and voting right.
The letter cited recent studies showing that borrowers don’t want to make payments again in May. This includes a report by the Government Accountability Office which estimates that roughly half of federal student loan borrowers are at “increased danger of default.”
Since March 2020, when former President Donald Trump signed the CARES Act into law, borrowers have not had to pay any payments. This halted payments until September 2020 and froze interest accumulations for roughly 42 million borrowers.
Later Trump took executive action for extending the deferral period to January 2021. On his first day of office, Biden signed an executive order extending the pause until Sept. 30. In September, he extended the pause to borrowers for another month. 31 before they could resume making payments. He extended the pause to May 1 in December.
Borrowers with privately-held loans are exempted from the moratorium
While the White House has not indicated whether Biden will extend another extension, advocates are encouraged by the fact the administration hasn’t completely ruled it out, as was the case last autumn, when the White House explicitly stated that it would not extend the suspension beyond January 31. After the coronavirus omicron virus hit, Biden changed his mind.
Jen Psaki, White House press secretary, said that Biden is concerned about the political consequences of restarting student loans payments so close to elections.
She stated, “We’ve been very clear about what we are preparing for. But the president will make these decisions based upon what economic data shows and what is most needed at the moment in the country.”
