Payment Pause Extended Amid Legal Battles

President Biden is keeping student loan payments turned off for at least another six months to give the federal courts time to consider the many lawsuits challenging his administration’s plan to forgive up to $20,000 in federal student loans for eligible Americans, the White House announced Tuesday.

The one-time debt relief plan is currently blocked by a federal appeals court, though the Department of Justice has asked the Supreme Court to rule on the case. Payments will be paused through June 30 to give the court time to hear the case during its current term. However, they could restart sooner if the litigation is resolved before then or if Education Department is allowed to forgive student loans as initially planned.

“Payments will restart 60 days after we can provide debt relief, the litigation is resolved, or June 30—whichever comes first,” Education under secretary James Kvaal wrote on Twitter.

The payments, which have been paused since March 2020, were set to resume Jan. 1 as part of the broader plan to cancel billions in federal student loans for eligible Americans. Under the plan, borrowers who earn less than $125,000 and $250,000 for married couples would be eligible for up to $10,000 in debt cancellation. Those who also received a Pell Grant in college are eligible for an additional $10,000 in debt relief.

In court filings, the administration has argued that vulnerable borrowers were likely to default on their student loans as a result of the pandemic, making the $10,000 or $20,000 of loan cancellation necessary so that individuals won’t be worse off.

“I’m completely confident my plan is legal,” Biden said in a video statement. “Right now, it’s on hold because of these lawsuits. We’re not going to back down on our fight to give families breathing room … But it isn’t fair, as tens of millions of borrowers are eligible for relief to resume their student debt payments while the courts consider the lawsuit.”

Because of the legal challenges, advocates have called on the administration to extend the pause until the lawsuits have wrapped up and loans have been forgiven. The campaign included an online petition signed by thousands and a letter to Biden from more than 200 organizations. The lawsuits have focused on the debt-relief plan, not the payment pause. Advocates argued that resuming payments without first canceling student loans would be devastating to the finances of student loan borrowers.

On Twitter, the account representing Republicans on the House Committee on Education and Labor called the move “sheer insanity.”

“This policy costs taxpayers BILLIONS every month it continues. A return to repayment is long overdue,” the account posted.

Washington senator Patty Murray, chairwoman of the Senate Committee on Health, Education, Labor and Pensions, said in a statement that the administration has the legal authority to provide debt relief and the rulings and lawsuits challenging the plan are baseless.

“With borrowers in limbo while this makes its way through the courts, I’m glad the administration has moved to extend the student loan pause and take some stress off the shoulders of borrowers in Washington State and across the country—and I’ll keep working with the administration and my colleagues to fix our broken student loan system for everyone and in the long term,” she said.

More than 26 million Americans applied for student loan forgiveness before the department stopped taking applications following a court order. About 16 million borrowers have already been approved for relief.

“Callous efforts to block student debt relief in the courts have caused tremendous financial uncertainty for millions of borrowers who cannot set their family budgets or even plan for the holidays without a clear picture of their student debt obligations, and it’s just plain wrong,” U.S. Secretary of Education Miguel Cardona said in a statement. “I want borrowers to know that the Biden-Harris administration has their backs and we’re as committed as ever to fighting to deliver essential student debt relief to tens of millions of Americans. We’re extending the payment pause because it would be deeply unfair to ask borrowers to pay a debt that they wouldn’t have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests.”

Debt-relief advocates praised Biden’s decision and called on the administration to continue fighting to make the student loan forgiveness plan a reality.

“Restarting student loan payments is simply not affordable for millions of Americans. Federal student loan payments must not resume during this critical time—and the pause should continue until the president’s student debt cancellation plan is secured,” said Natalia Abrams, president of the Student Debt Crisis Center, in a statement. “We applaud the president for doing the right thing.”

About 83 percent of student loan borrowers who responded to a recent Student Debt Crisis Center survey said that they currently depend on the payment pause as pandemic relief, and two-thirds of respondents said they haven’t financially recovered from the pandemic.

Mike Pierce, executive director of Student Borrower Protection Center, said in a statement that the announcement shows that borrowers can depend on Biden to keep his promise and deliver on student debt relief.

“The Republican politicians set on keeping their constituents in debt should take note: borrowers made this happen and borrowers will continue to fight until student debt cancellation is won,” Pierce said. “This extension means that struggling borrowers will be able to keep food on their tables during the holiday season—and the coming months—as the administration does everything it can to beat back the baseless and backward attacks on working families with student debt.”